Flumet - French Alps! Is Cash Back legal?

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Flumet - French Alps! Is Cash Back legal?

Hi everyone,

Just a couple of questions, I have been offered a leaseback deal by Viceroy Invest, they have offered a 3 star, two bed apartment in Flumet (A village in the alps), sounds like a nice village and a nice property but im not to sure about the cash back part of it. The offer is as below:

2 Bed Apartment - 34 m2
Price (inc. VAT) - € 159, 196
VAT (paid by developer) - € 26, 089
Price (exc. VAT) - € 133, 107
Maximum Mortgage Amount - € 133, 107
Deposit - €7960
Cash Back - € 20405
Monthly Repayments (25 yrs, 5.21% fixed rate) - € 789
Monthly Rental Income - € 460

Is it legal to offer cash back?? Ive been reading about it on UK property forums and apparently it is now considered as mortgage fraud over here, but is it the same in France? How does it work? And what are the implications?

Anyone with any further info on cash back in france, would be much appreciated, thanks!

I suggest you spend an hour reading this forum and then abandon as quickly as you can any thought of getting involved in this scheme. If I knew when I bought what I know now I wouldn't have touched the scheme with a hundred mile long bargepole. The cash back is a vat return from the French Government but can be demanded back if all goes wrong. Put your money under the mattress, it'll be safer there.

I agree totally with you ognip! They make it sound so prefent and GUARANTEED and then.... they don't pay rent! Good luck and remember, anything that looks too good to be true probably is!

The VAT is already being paid by the developer direct to the government and then the developer is going to claim that back himself.


But the cash back is something different, and its something that they are offering on their last few remaining apartments.


Also on leaseback schemes, is the rental not guaranteed by the government? What do you mean, that they sometimes dont end up paying the rent???


Who told you that the government guarantees the rental?? The government has nothing to do with it.Take a look all over this blog and you will see all of the people who are living through the non payment of rent. and by some of the biggest and most financially stable firms in this business. There is a site dedicated to exactlly this. http://residhotel.over-blog.com/

Truekumar,


You don't mention any personal use!If say the personal use was 2 weeks every year,it would be a main incentive to buy!


On face of it leasebacks look a good investment,that why most people went ahead and bought!


But they were mi-sold,agents and developers told us,


1)Guaranteed by French government----its rubbish


2)You can Use,rent youself or sell after first lease expiry--You can but are likley to suffer a hefty penaly!


3)Inflated claims for capiltal gains--There may be capital gains but if you sell within the lease the value is governed by the rental yeild!


4)An owner can use property at any time!--Not true,can only be used when management are open for holiday letting!


5)No mention of 3,6,9 break clause--Could leave you without any rent to pay the mortgage!


6)"The French government guarantee"--This claim has lead people to beleive that there rents are "safe".And that any management company that has jioned the scheme will honour the contract!We now that that is nonsense!


7)Only Tax fonciere to pay!--Co-Op fees can be substantial!


Finally i would ask you why you would want to subsidise this investment for nearly 4000euros + co-op fees,taxes,account fees and a whole lot hassle!


Regard


John






Ok guys, ive found out a little more info, the leaseback company is called Nemea, anyone heard of them?? Are they any good?? And they tell me that as long as Nemea stay in business, then they will guarantee the 4.15% yield rent.


By the way, there is no personal usage in this scheme, but that doesnt bother me as im buying purely as an investment.


In what circumstances would they stop paying me rent???


Also, they have still no clarified as to where they will be getting the cash back money from???? (Not VAT- different issue) They say that the developer will give me the € 20405 cash back upon completion of the development.


From everyone's responses, it seems that leaseback schemes are not worth it, but why not???




Truekumar,


This is not an investment!This a massive liability!So you pay them 4000Euros + costs every year for 25 years!


You havn't even got the benefit of a couple weeks holiday a year!



You are in a great position!.You havn't bought yet!Make sure it stays that way!



Regard


John



I do not understand what you are trying to say? Do those 4000 euros not pay off the mortgage? It will be mine in 25 years and then I can make a profit, can I not???


This is an investment, not a holiday home for me!

Truekumar,


I am trying to say this deal is bonkers!


4000 euros + at least another 1000euros costs per year which equates to 125000 euros over 25 years.Yes i would expect you to make you some capital gains over 25 years but 1 would expect this take a big chunk out of it!


If you compare this to a buy to let in the uk that i have completed on,Buying price £103,000(25% deposit,Minimum now!)postive cash flow of £280 per month.A profit not a deficit!


So why go to france and get involved with a very risky leaseback scheme when you don't want it as a holiday home anyway!



Regards


John