Lyndsey Gresham is 36 and lives in Hull with her two daughters, Constance aged 16 and Isobel aged 7. She is the managing director of a family timber importing company.
Why did you purchase a French leaseback?
Although I have long dreamed of buying abroad, my purchase of a one bed roomed ski apartment in Val d’Isere was swift, unexpected and surprising. Surprising, because my dream was to own a property in Spain.
What happened is that 18 months after my financially and emotionally horrendous divorce, a relative unexpectedly and very kindly gave me a capital sum, strictly to invest rather than spend on day to day expenses.
My boyfriend is an independent financial advisor and I had heard him say a few times that if he had spare cash to invest: he would consider investing in a sale and leaseback schemes so when I got the news about the capital sum I started searching on the internet. The amount of money I had to spend would not have bought me the kind of property I would like to own eventually in Spain – but it looked like it might buy me a property in the Alps.
My boyfriend, my eldest daughter and I are recent and obsessive converts to skiing and buying alpine property also appealed to me from an investment perspective. I like the fact that supply is limited by geography: You can build new golf courses but you can’t build new high altitude mountains in Europe and development in the best ski domains is highly restricted. Also, the demand for winter sports is rising every year.
In addition, I wanted to buy a property that wouldn’t be too affected by possible rises in the cost of air travel, – the Alps can be reached by train or car from England and of course the greatest numbers of visitors are from continental Europe so demand isn’t budget flight dependant.
I found leaseback apartments in a renovation of an existing Residence in La Daille in Val d’Isere. I couldn’t believe that the prices started within my budget, I had never been to the resort (too expensive!) but I knew it was one of the best in the world, high altitude and with après ski to die for.
Sure enough when I rang to enquire, I learned that the development had sold out.
In response to my obvious disappointment the sales consultant told me they did get apartments coming back on the market as some investors would reserve, perhaps a few units and then adjust. To cut a long story short my perfect apartment became available: one bedroom sleeping up to 5 people with a huge south facing balcony overlooking the famous World Cup OK piste.
How did you make the purchase?
The apartment cost around £161,000 including furniture. Under the French sale and leaseback scheme I was exempted from paying the 12.5% VAT due on a renovation property.
I have chosen to buy the property on a 3.6% formula: this means that I own the property outright but have agreed lease it back to the company in return for a guaranteed rental return of 3.6% per annum and 3 weeks use of the apartment a year; two in the winter ski season and one in summer. This agreement lasts for 9 years after which I may or may not renew it as I choose.
Pierre & Vacances are responsible for all repairs and maintenance and it is in their interest to maintain it well as they need to generate income by renting it out to their holiday customers.
The capital gift I received was less than half the total cost of the purchase so I have made up the difference with an interest only French mortgage, the beauty is that the rent I receive is greater than the mortgage repayments so there are no ongoing costs. After 10 years my mortgage reverts to a repayment mortgage but by that time the rental returns on the property (which are linked to the French Cost of Construction Index) will almost certainly have risen enough to cover the increased mortgage repayments.
My mortgage is with BPI and I have found them a joy deal compared to English institutions. I have a named contact who responds with lightening speed to any queries, and in superb English. In general customer service in France seems to be much better and more personal than in England, I have a French bank account with HSBC in Grenoble and it is normal to speak directly to someone at the branch, – heaven after negotiating the automated services we have in England.
How is the leaseback purchase working out?
This way of purchasing abroad is perfect for me at my current time of life and my financial situation. It is low risk which is essential as I am not wealthy and it has enabled me to get into the market at a relatively low price taking advantage of the French tax incentives.
The leaseback arrangement whereby I get three weeks a year in the apartment is ideal as I work full time and could not really spend any more time than this away anyway.
A huge plus is that I can swap my weeks in my apartment with other Pierre & Vacances owners, and since there are Pierre & Vacances Residences on the Cote d’Azure, Paris, the rest of France and in Italy and Spain as well as in other superb ski resorts, this removes the worry that buying a property abroad means you will be restricting your future holidays to one destination. It also means that my youngest daughter, Isobel, who has cerebral palsy, will be able to benefit from the purchase almost if not all the available properties are wheelchair accessible.
It is wonderful looking forward to years of exploring the Espace Killy and getting to know Val d’Isere as “home”. I have not told my eldest daughter anything about the purchase as I am going to surprise her the first time we go there together.
I am also looking forward to our summer weeks as the Vanoise National Park, in which Val d’Isere is situated, has spectacular scenery and walks and there is a full range of mountain activities to try such as Via Ferrata, climbing, mountain biking and white water rafting. In the summer we can take the time to drive to the historic towns of the Savoie region whereas in winter we won’t be able to tear ourselves away from the mountains.
The only downside is that I am now back at night classes resurrecting my very rusty French having spent the five previous years perfecting my Spanish!