 brian
brian
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richmond, French leasebacks are all (afaik) freehold properties. In order to get the benefits of the rebate and tax breaks on the rental income, you agree to lease the property to the developer for 9-11 years. There's then normally the chance for both sides to agree to a further 9 year lease at a renegotiated rate or opt out as they see fit. Theoretically (according to the likes of French property lawyer, Stephen Smith) the developer could insist on the 2nd lease period but none have enforced that to date.
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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richmond, there is no such thing as leasehold in France, all property is freehold. Leaseback is entirely different.
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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Helen Beaumont, that's what I thought (leaseback being entirely different to freehold/leasehold), but freehold and leaseback have been contrasted on this thread.
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Don't have time to comment on the leasback state of our property right now, but be aware of the CGT taper relief in France is NOT transferable to your UK tax bill. Nor, as a matter of interest, are "no CGT" offers in places like Morroco or Slovakia, trying to encourage an investment influx,
This is an important point often missed by first time buyers abroad, attracted by so called "favourable" tax regimes.
Why does this matter? - Because our friendly IRS will nail you for the whole damn lot anyway. If you paid CGT in Morcoco / France or wherever, you can offset that against your UK tax bill, but the total will be the same: "No CGT paid? - well lucky you, but that means you have nothing to offset against how much I am going to take you for. Sir".
So please don't mistakenly think of it as an advantage, unless you are so patriotic you want to money to end up with Gordon rather than Pierre. You will pay CGT, and you will pay it all.
The ONLY way it benefits you is if you become domiciled for tax purpose in the country of purchase, and then sell , presumably to buy another place (since you are now a resident...)
AFAIR the original point of the thread, have you negotiated individual lease-back circumstances for yourself?: no.
However, we know a number of people in Arcs 1950 who did - for example, demanding ( negotiating? - who really knows!) to take a "0 week" setup, which was not on the original list of options: still get choice of renting for themselves if they want to, but freedom to choose other resorts as required. Why would you want to rent your own place? - because if you have "5 weeks" guaranteed, then that is 5 weeks that the taxman (again...) sees as your "income", irrespective of you using it nor not.
Also the leasback operator deducts (a requirement under French law apparently) the 'value' of the 5 weeks you have received from your rental income and again, do so whether you use it or not .
In our scheme, they take the value of your weeks as being 75% rack rate. That's what they also charge you if you book additional weeks over and above your alloted amount.
So you pay for it, and are taxed on it, whether you use it or not.
So you might as well get rid of the obligation to use it, buy what you need when you want it, and enjoy skiing elsewhere in the world without funding another Politican's wet dream about 'legacy' without getting anything in return.
Did we do that? - no - not smart enough, not well enough informed. Am I trying for it of the next purchase? - like a shot.
richmond, Leaseback is not leasing it back to the builder - you 'lease' it to a tenant, in our case for example a hotel operator - you are the lesssor, they are the lessee - they then conduct their business of renting it out, ( cleaning it, maintaining it etc.etc.) and give you back some money for its use in this way.
To qualify for the various tax breaks as discussed above, I am informed that a certain % of properties (or sq meterage) in a development have to be operatored as tourist residences, under a leaseback scheme.
Too many people swapping to become freeholders at the end of the first 11 year agreement will I believe will invalidate the VAT exemption ( although this is a strange one, as the logical conclusion is that even if I don't, I will still lose out if everyones decides to do that...so maybe some testing of the water required.).
It also is not always good for the commune - who would open a shop when all the houses are only occupied say 4 weeks out of 20? - assuming you have bought your second home for your exclusive use, and are not renting it out in the weeks you are not there.
And that is why the tax breaks are there - to build communities with diversity of business and occupied property, not have empty shells sitting doing nothing.
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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| Quote: |
what i can buy is so much better that anywhere else -
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orinoco, you've got to ask yourself why there isn't a market in leaseback resales. If it's such a desirable commodity. The deal is as good as the reliability of the management outfit. They might go bust, like one of the biggest firms just did. Why doesn't anybody buy second hand timeshares?
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orinoco, buy a freehold
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pam and skimottaret, thanks for the advice. i gain the impression that there is not much of a market in leaseback resales for a couple of reasons. firstly, there aren't many of them, and secondly when new leasebacks are easy to sell, give agents good commission, and there is a lot of advertising hype.
what has been put me off buying a freehold is lacking the time and interest in doing all the management work myself...
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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orinoco,
I think also on older leasebacks there was a condition that the seller had to repay the VAT they had got from the purchase if they sold the leaseback. Not 100% sure but this has changed of late and VAT is not repaid by the seller. Look into it, wouldn't let it put you of if it suits you. 
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orinoco, I am a bit fuzzy on the detail but i believe the VAT relief on a leaseback is pro rata over 20 years, basically one percent per year taper relief. Unless you hold the property for the full 20years there will be VAT to pay on an early resell.
My main reason for not buying a leaseback was that no one could prove to me what the capital appreciation was on a leaseback property. The ONLY leaseback property i saw was valued significantly lower than the free holds because the agent told me there was a few years left on the contract (which would transfer to the new owners) and this was too restrictive to potential purchasers, Also, ominously the agent mentioned that the leaseback property would need serious refurbishment at the end of the lease term......
Ask the selling agent of a leaseback the question, what happens at the end of two lease periods? Most leases i saw were 9 or 11 years and funny enough there were several "new leaseback opportunities" selling leasebacks in "newly refurbished" 20 year old buildings... My guess is the the developers hit the leaseback "owners" with a huge bill for refurb at the end of the contract and then buy up the properties on the cheap, selling them on to a new crop of tenants and the owners dont realise as much capital growth as they could.
I could be wrong with this view and would be interested to hear how happy anyone with a leaseback coming to the end of its term is.....
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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| Quote: |
what has been put me off buying a freehold is lacking the time and interest in doing all the management work myself...
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But this isn't really the choice, is it? Leasebacks are freehold too, as I learnt earlier in this thread. It really depends on what you want, your priorities for an investment (risk versus growth etc), how much you want to spend, whether this is an investment or a "lifestyle" decision, etc. And if you want your own place, you don't buy a leaseback. If you want an investment that gives you a return, it could be anything, and you could use your "earnings" to rent a place in a ski resort, any time you like, any resort you like. If you don't have time to sort out your own apartment, rent someone else's. The way you manage your money to enable you to do that is a separate issue. You could be "investing" in a ski resort, or you could be "investing" in stocks and shares, or "investing" in pile of gold bars.
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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orinoco, as pam w, says, also check the fine print on a leaseback you will most likely NOT be able to personalise the apartment, you might not even have a storage locker or even be guaranteed to use your property during your n weeks annual allotment, most leases say that you will be offered a "similar "apartment that is available not neccessarily yours.
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folks, thanks again for the advice.
gwaelod, the sale is being done without the VAT being given by the vendor to the French Government and then back to me; there seems to have been some legal change that allows this. instead, the price has taken this into consideration.
skimottaret, i agree with you that the leasehold market does seem rather unclear  - the estate agent has been quite upfront with me about this, and said that there is not much point in buying unless i intend to keep for the next 15 years (the property is 5 years old). being a chalet it will require more upkeep, but the build quality seems good. the exterior wood will need varnishing every few years or so, though.
pam, i have thought long and hard about putting my money into a leashold, and the advice to treat it as another investment, and is this the best class does make a lot of sense to me - it is quite easy to get swept away (avalanched!? ) in the emotion of owing a ski property. as our mortgage isn't huge, and for other reasons, such as being able to gear the investment with a 10% deposit, it does seem an appropriate investment for us at this time, especially as our kids are some way off the expensive stage.
the management company was taken over a couple of years ago from grandalpes. the new outfit is much smaller, but the owners i hear are now happy, and it is difficult not to be impressed by the new general manager (i hope he stays!) there are no opportunities for personalising the chalet, but it suits me as i don't want the work!
yes, it would be good to hear from anybody who has done the 20 years with a leashold...!
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You know it makes sense.
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it would indeed be very interesting to hear from anybody who had bought under a leaseback arrangement, preferably some years back, and who is actually really happy with their decision and convinced it was right. Most of the people who have contributed here - rather bravely, I think, have tended to say that they would not do the same again. That's a hard confession to make - we all like to think we make wise decisions. so anyone willing to confess they probably didn't deserves to be carefully listened to! Are there any owners, anywhere, now in 100% possession of their former leaseback properties, still in good nick, still enjoyable, etc? I'm still not clear what, if you don't want a "personal" place, the objective of buying is. What kind of assumptions about longer term capital value are needed to make the sums stack up? One of the things that would worry me is the fact that French law appears to allow resorts to insist on extending the leaseback arrangement after the original period. It would certainly be worth trying to speak to as many existing owners as possible - rather than just accept the word of a third party that they are all happy with the management arrangements.
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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Poster: A snowHead
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orinoco,
We are in the process of buying a new leaseback in Arc 2000, due to 'exchange' in January or February. The palce will be built next year, due to open in 08/09. Looked at the options and though not perfect I am more than happy to buy a new leaseback.
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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gwaelod, you are correct a leaseback is a freehold. sorry i didnt use correct terminology, I guess i meant buy a freehold without a long term lease attached, nor the VAT taper relief. But that is one mans opinion and loads have bought leasebacks..... horses for courses.....
Last edited by Obviously A snowHead isn't a real person on Mon 12-11-07 11:06; edited 1 time in total
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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pam, sorry, i wasn't very clear - have spoken to one of the owners who reports that he and his fellow owners are now happy...
i have been searching on the forum for stories of those who are now less keen on leaseback having bought a property, but can't seem to find  . can you point the newbie in the right direction?
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You need to Login to know who's really who.
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orinoco, My advice would be to not go for the leaseback and organise everything yourself. €450K for that size of property is extremly good value, is it in the resort or in a valley. The reason I ask if it is in the resort proper it would be better for you to rent it out yourself via a local agent. You will have to lose about 30% to the agent but wont have a problem with leaks, plastering, blockages, changing light bulbs etc. The question that can not be answered is what happens after 11 years? Some times as skimottaret, the companies may put a squeeze on owners and buy up cheaply.
Be aware of the pitfalls of leaseback. For us it didn't add up and we went down the other route and rent out via estate agent in the normal way. Rental has always covered the costs, however we bought a good few years ago at the right price.
Interesting thread, step back look at the proposal objectivly and jump then! Good luck with your decision.
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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roy, thanks. the chalet, in reply to your question, is in oz en oisans - 1300metres with direct links into the main alpe d'huez circuit. yes, it does seem very good value - i haven't seen anything to compare with for the money; the location is very convenient.
jumping brings to mind the contradictory proverbs of looking before you do so, but also he who hesitates is lost! i am currently feeling more in the lost category with this purchase...!
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Of course I accept this. What is your guarentee rental less water, electricity, maintanence costs, tax's etc. or have they not given you the previous 3-5 years upkeep figures. This is crucial, look at mortgage pay back, together with these costs and if the difference is managable go for it. But only if you can get the guarentee rental figures and and the additional costs.
Sounds interesting.
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Flexibility in owners usage is also a key factor. With leaseback you must select you set few weeks very early in the year and then they are fixed for the season. That may suit you now but what about in 9 years time? Talk with some local managing agents with regards to cleaning and maintenence and marketing.
For me being able to be flexible whenever I want to use the place (including summer) made the decision a no brainer.
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orinoco, I'm not clear from these last few posts whether you have the choice, with this property, of going down a leaseback route, or a "DIY" route. That would be very unusual, I think. But if you have that option I would agree with the suggestions that you do it yourself, but get a local agent to do the work. However, I suspect that's not the option. Don't forget that either way will make you a French taxpayer, so you need to be aware of what that will involve, including paying someone to do the tax for you.
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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| orinoco wrote: |
roy, thanks. the chalet, in reply to your question, is in oz en oisans - 1300metres with direct links into the main alpe d'huez circuit. yes, it does seem very good value - i haven't seen anything to compare with for the money; the location is very convenient.
jumping brings to mind the contradictory proverbs of looking before you do so, but also he who hesitates is lost! i am currently feeling more in the lost category with this purchase...! |
I've seen the leasebacks and they do look value for money. One possibility you may have is not to renew the leaseback and run it as a freestanding chalet. Potentially the lease could be compelled but I understand in practice this doesn't occur. Caveat emptor-take proper advice..
I have a leaseback in the chalet des neiges block in oz en oisans. its a lovely spot. It provides an excellent link in to the ADH ski domain.
however prices in the area are not stratospheric. have a look at cost of new build in vaujany to compare. http://www.immo-oisans.com/anglais/vente/eaudolle/fcentre.htm One snowhead was buying a plot in oz to develop to build own chalet. prob alot more hassle, but a possible option. Prices are low because its not courchevel meribel etc. Long term it remains to be seen whether this is a good investment. I think it is-ask me in 20 years time
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roy, the guarnteed rental is 21K euros (indexed) or so after all taxes. that allows for no personal use in high season - if you want it then it is usual rate minus 15%. outside the ski season and july/august, personal use is unlimited and free. so, at least at this stage, i am seeing it more as an investment, but this may well change with time.
the lease will be renegotiated in 4 years, so i expect an increase and/or a free week in high season. due to the lease being ongoing there doesn't seem an option of buying without it- it's leaseback or nothing! i think that this has helped bring the price down...
wrt an accountant i have been told to allow about 300 euros a year for this - is that about right? interestingly, the compromis (sales contract) talks about a 30-year  commitment to rent the chalet out - i think this was a condition of planning permission - so it does feel like a long-term project! as well as penalties for this there are the standard penalties for not renewing the lease with the management company during the first 20 years.
prices in vaujany are 1.5-2 times as much, it seems. i think that, as dan suggests, that long-term the region has potentially got a lot going for it, especially as those seeking affordability see its potential as a high and extensive french resort. that's what i'd like to think anyway  !
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FAQ
. the link to my question is that i am attempting to buy a resale of a leaseback in the alpe d'huez region. the paperwork involved in this seems immense and slow 
