Are Leaseback properties acceptable” ?
A. As a general point, leaseback type purchases, where you propose to enter into granting a long term lease to a developer are only acceptable in certain cases, which is broadly speaking where the Developer is very well known, and the property is in certain regions of very high domestic demand (Paris, Cote d’Azure etc). Otherwise, such cases cannot be placed with lenders on our lending panel. The reason there is a problem concerning this aspect, in general terms, is as follows:- Under a long leaseback arrangement, the mortgage lender cannot “easily sell the property on the open market”. This is the nub of the problem. If you propose to sign the property over to a Developer under a long leaseback scheme (often for 9 years or more), where you would only have rights to use the property for, perhaps, a few weeks a year (on newly build property this is done to reclaim French TVA / VAT) then, lenders will often not be interested in granting a mortgage on that type of arrangement – as such sc
