Friday, July 24, 2009

"Up to 30,000 buy-to-let investors duped"!

According to a report in today's French newspaper Le Figaro, up to 30,000 investors in buy-to-let properties now find themselves in debt and saddled with a property they find they cannot sell.

Attracted by government tax saving schemes, such as Robien and Borloo, many were persuaded by their banks and property developers to invest in apartments designed for rental, and in many cases situated hundreds of kilometres from where the investor resided. Surpisingly, less than 50% bothered to visit and check the location proposed, and were later dismayed to find that their investment turned out to be a badly built property, located in an area where people did not wish to live, and sold to them at three or four times the cost of construction.

As a result, they are now left with a property which is impossible to let and which, under the various schemes, they cannot sell for another 10 years, though many are buying on credit up to a period of 25 years. One investor stated that on a property purchased for 120,000 euros, he expected to lose 30,000 euros. Average monthly costs were also reportedly higher than predicted, at an average of 300 to 400 euros, and difficult to finance in the absence of the expected income from rentals.

Languedoc-Roussillon has not been spared and the report cites schemes in Perpignan, Béziers and Narbonne where investors have experienced difficulties. According to one of France's leading loan specialists, even under the government's latest scheme (known as Scellier) up to 90% of the developments proposed are located in towns classified as having a limited rental market.