It seemed a ‘no-brainer’ when Derek Little invested in commercial holiday flats after being guaranteed a 5% return to fund his retirement; but French leaseback has burned him and thousands of others.
Mr Little, 68, from Donegal, bought properties at Les Deux Alpes and Disneyland Paris in 2006 thinking they were in holiday areas that would always have visitors renting.
But management and build problems meant the properties lay closed and empty, rents were never paid, and new managers wanted to renegotiate leases at lower returns.
“At first, we were paid in advance and it was all fine. But then problems started; a bankrupt management firm, serious plumbing problems, basically we were not being paid.
“We have won court case after court case against the Paris company but it never pays up. The law is a joke.
“The Deux Alpes one is now OK, but my €400,000 investment in the two properties is now worth less than half that as no one would buy.”
Other owners feel they are being ‘blackmailed’ to sign new leases with higher management fees and lower rents.
British MEP Dan Dalton is on the Euro Parliament Consumer Protection committee and told Connexion that buyers felt they were “misled by the leaseback companies and have not been protected as consumers. Leaseback schemes caused significant financial losses.”
He asked the UK Competition and Markets Authority and the EU Consumer Commissioner for a thorough investigation by the French authorities and added that if owners were “deliberately misled and the leasebacks mis-sold, I expect appropriate legal redress”.
The CMA has asked French DGCCRF counterparts to take action over a cross-border infringement of EU consumer rules. The DGCCRF has confirmed it is investigating.
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