Aug 282013

French Leaseback Scam

At this stage there is practically nobody in the UK or Ireland with an interest in property that has not heard of French Leaseback property. This product was (and still is to some extent) promoted to avid UK and Irish property investors as the ultimate ‘hands off’ property investment product. The usual blurb would go something like this: “you can pick up French sale and leaseback holiday homes with 100% mortgages at all-time-low interest rates, guaranteed rental returns and a variety of tax breaks.” In fact, 2013’s blurb hadn’t changed much, just replace the 100% with 85% and there you have it straight from Channel 4’s  ‘A Place in the Sun’ in March 2013. The problem is, those that have already ‘invested’ in French Leaseback properties are at this stage very much convinced that the product, far from being a ‘guaranteed return investment’ is in fact a great big scam. In one owner’s opinion up to 90% of people who have invested in leaseback product have had mostly negative experiences. That is a serious indictment of an industry that is promoted as being the exact opposite – ‘hands off’, ‘easy maintenance’ & ‘guaranteed return’ are just some of the promotional buzz words. The odd thing is – nobody is really talking about what is, essentially, an epidemic being nicely swept under the carpet. It is just a murmur in France – when it should really be a roar.


Note – For those interested, a petition has been set up in early 2017 with the aim of highlighting issues with French Leaseback properties at EU and French government level. If you wish to sign the petition the link is :


Note from February 2018: An Irish leaseback property owner is being sued by a French Bank following default on a mortgage for a French Leaseback property. The owner is fighting the legal action through Dublin solicitors Mason, Hayes & Curran. If you would like to help out (and possibly create a precedent if you are in a similar position) you can do so on the GoFundMe page set up to fund the case. It can be reached via the following link – FrenchLeasebackScandal Go Fund Me.


I spoke with one such investor who has, over a period of years, owned what he refers to as ‘seven of the bloody things’. This has given him a lot more experience of this market than most of those actually promoting French Leaseback properties. He is in no way complimentary about the leaseback industry which he deems to be a ‘total scam’.

He has asked not to be named for obvious reasons, but a brief chat is enough to convince that he does, indeed, know exactly what he is talking about.

French Leaseback Scam – Right from the Off

This is, he claims, a market that is rotten to the core and was, right from the very off. Property was sold at a 30 to 40% premium to the market which put investors at a disadvantage from the minute they paid a deposit.

It was heavily marketed on the basis of being a ‘government backed’ product – which as I’ve explained on this site before, it never was. There was a VAT return element, but this was already priced into the properties so investors never benefitted from it in any case.

Management companies were set up with backhanders from developers to keep them operational for a few years to get the properties built and off their hands. The management companies would then claim that they could not continue to provide the agreed returns (often as high as 5%) and owners would have to take a 30% to 50% reduction in rental income for the company to remain viable. Because the owner base generally covered a variety of individuals from across France, the UK and Ireland there was no hope of them ever having the ability to get together to challenge the management company. They took the reduction or the management company folded. Those were the stark options. When the management company did fold an incoming company was not obliged to offer the same yield, so investors found their income, where paid at all, had dropped dramatically one way or another.

French Leaseback Scam – The Added Costs Gravy Train

Even where the management companies stayed solvent investors have found that they are liable for a raft of extra costs and charges, detailed in French small print, about which they knew nothing at time of purchase. Ultimately, if the property made any money they didn’t get it anyway. One example is ‘an eviction indemnity’ which essentially allows the management company to charge an investor a hefty fee if they decide not to renew the lease when it falls due – which many have done over the past few years. It is being sought for loss of a going concern- ‘une perte de fonds de commerce’.  This indemnity can be anything up to three years of standard rental income – Nemea for example has stated that it is entitled to impose such costs on owners of properties managed by the group. This new law was introduced in October 2009, is retrospective in nature and a wholly legal route for leaseback operators to penalise owners.

French Leaseback Scam – Counting the Cost

Back at home investors were left with the shortfall – at a time when they could least afford it. Many of them had seen their wages cut, had lost jobs or had seen the value of their investments either slashed or, in many cases, completely obliterated. Many, many Irish and British people had believed the hype from the seemingly booming banking industry, and bank shares were a staple in practically every investment portfolio. Virtually all of them have been wiped out by the property related banking bubble and bust.

This investor claims that it is virtually impossible to sell a French leaseback unless you have an incredible level of perseverance or a lot of luck. This is from somebody who is fluent in French, has contact with several Notaire’s (French notaries) and knows the country very well. It is something that most people have not the ability, the time, the finance or the desire to countenance.

Some leaseback products are, he says, quite saleable, but there are not many of them in his experience. He has sold one of the seven he owned for a marginal profit, that he considered a huge achievement. With the others he was not nearly as lucky and, he states, you need to be prepared to take a serious loss in order to sell most of them. Locals will buy them if they are cheap enough and they can wriggle out of the lease, other than that he contends that you can forget about selling the vast majority of French leaseback property on the market.

French Leaseback Scam – Where’s the Beef?

Personally, I have approached at least a half dozen French Leaseback sales companies, some of them very large, to put me in touch with someone who had purchased and subsequently sold a leaseback property – whether for a profit or a loss. I have never had one of them provide me with somebody to speak to despite some of the companies claiming to have ‘resold’ many millions worth of property each year. I do have one acquaintance who has sold one at a modest gain but he admits himself that it was sold only because the development was literally at the base of the ski lift on a high profile Alpine slope – location and all that. He has another leaseback property in a less salubrious development that he has not managed to sell and feels that it will be sold for a huge loss, if at all.

French Leaseback Scam – Some Advice

If you do wish to sell your property this investor’s suggestion is that the best route is to go local – nobody is selling these from Ireland or the UK. He also says the French small ads website is well worth a visit. It is slightly quirky in that it can only take French Visa cards and there is no English version but it does work – no other avenue has ever achieved anything like the results he has seen from this particular site.

If you find yourself in a situation whereby no rent is forthcoming and a period of more than one month has elapsed from the time rent was due you can engage the services of a ‘huissier de justice’ or bailiff to serve the operator ‘un commandement de payer’ – an ‘order to pay’ notice.

Some companies take heed of this and pay up but many do not. The cost of engaging the services of a huissier is about €75. The huissier must live in the area where the residence is located.

If you have the good fortune to have your lease rescinded by the ‘administrateur judiciaire’ (receiver) for non-payment of rent then whatever you do in the future, do not sign another lease with anybody else.

Rent out the property yourself or go through an independent rental agent. You must fulfil 3 of the following criteria governing the ‘Résidence de Tourisme’ industry:

  1. Meet and greet the clients
  2. Provide linen or have linen provided
  3. Hand over the keys of the apartment to the holidaymakers
  4. Provide breakfast.

Most people fulfil the first 3 criteria. You can advertise your apartment on or You will invariably make a lot more out of a property renting it out yourself than you will through the vast majority of leaseback operators.

If you are selling do take into account that most ‘Résidences de Tourisme’ properties were overvalued to the tune of 30% to 40% at the time of purchase. In the vast majority of cases these properties will have not appreciated in value at all. Depending on when they were purchased, many will have fallen further in price from that time so you will have to be realistic in your asking price if you do wish to move the property on.

French Leaseback Scam – Nobody’s Interested

On a slightly different topic, this investor contacted both the Sunday Independent and the Sunday Business Post to see if either one would do a simple report on his experiences with a product that was heavily advertised in both newspapers for many years. He’s never heard from either of them again nor does he expect to.

If you want to contact me about your experience of French Leaseback – good or bad – please drop a line to

French Leaseback Scam

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  26 Responses to “French Leaseback Scam”

  1. Hi Diarmuid
    I read your article on French leasebacks . It was very informative if a bit depressing. I’m so sorry I didn’t do more research on the issue before investing.
    I bought a leaseback from Quietude Evasion in 2006. They quickly got into trouble and went into liquidation in 2009 having left us short about 18 months rent. The owners formed a group and negotiated with another company Goelia who are now running the site but only paying about a third of the original rent.
    I remortgaged my own house in Ireland to buy the leaseback and am now being pressurised by bank into selling the French property.
    Has the market improved any and who if any would you recommend could sell it.

    • To be honest Marcus, although it’s not the answer you want to hear, no the market for resale Leaseback properties has not improved.

      If you are to sell it the best place to list it is with agents local to the property. There’s no point listing it in Ireland or the UK, neither are buying much Leaseback type property in France at the moment so you’d just be wasting your money.

      Just bear in mind that you’ll likely have to take quite a hit on it if you sell before the end of the lease. If you can hold out and sell it as a freehold property you may be able to ask for more (just remember I don’t know the development in question or the specific property, so this is a general comment).

    • To Marcus O Connor. How are you faring with Goelia. They are interested in taking over a scheme in which we are a member. Would be interested to know before we sign up. Thanks in advance.

      • Hi Finbarr
        Well they have always paid the rent on time and they seem to be more professional in their management and marketing of the site. Check out their website The problem is of course they are only paying a third of the original amount that I was contracted to pay by the original company. It’s not near enough to cover the mortgage that We took out.
        I have gotten a bit philosophical about the whole thing and am putting it down as an expensive life experience.