Do you hold French Property in a Self-invested personal pension?
Are you stuck in a financial trap seeing your investment plummet?
In 2007, French Leaseback properties were marketed heavily in a number of national newspapers and estate agents, and many IFAs were encouraged to promote these as investments as suitable for a SIPP. The idea of owning property in the south of France or at a French ski resort was very attractive to investors, in particular when the owner was offered the opportunity to take a number of weeks each year at their property.
The returns on offer were guaranteed for several years, and a management company would be put in place to maintain your accommodation and collect the rent from the tenants, and there wasn’t even a need to visit France to conclude the purchase. Many of the top French banks also assisted people in funding their purchases, and for the first two years, the developer would pay the French equivalent of “council tax” (Taxe Fonciere) which is initially kept very low. In addition, by buying one of these properties a buyer could also reclaim the TVA which is charged at 19% in France on the purchase price.
What could possibly go wrong?
After the first 2 years of reduced “council tax”, the owner was likely to get a very nasty shock when the bill rose fourfold. In addition, the investor is exposed to the risk of the tenant defaulting on the rent leaving the owner having to cover any mortgage payments from their own resources. In some cases, management companies stopped forwarding the rent causing the same problem. Disenchanted owners have tried to sack management companies only to find that under French law the management company was entitled to compensation equal to several years lost management revenue.
How are you going to pursue a legal case in France against the management company and/or any tenants? The French court system is notoriously slow, and the legislation can be very different to that which exists in the UK. A Section 21 notice won’t help you here!
You could try and sell your property, however, if the buyer discovers your property is a distressed sale because there are issues, or the returns are poor, then you are unlikely to get your money back.
How can I claim compensation?
These investments were non-standard and high-risk. Many people have lost money already or are at risk of doing so in the future. If you feel that you have lost money as a result of such an investment, and your decision to make such an investment was solely based on the advice of an IFA, then we can potentially pursue a SIPP's compensation claim on your behalf under a “no win no fee” agreement. If you have been advised to cash in or surrender existing investments or pension plans to purchase French property, we would like to hear from you.
For more information or to start a claim for compensation, please call 0300 303 3819.
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