• Buying in: Courchevel
• Property price: €862,000
• Loan Amount: €603,750
• Interest Rate: 2.00%
• LTV: 70% fixed
• Mortgage Term: 20 years
• Mortgage Type: Repayment

The Background

Our clients are avid skiers with a young family. They have been going to Courchevel for many years and dreamt of owning a property there. Our clients decided to buy an off-plan property with a rental agreement included which stipulated that the developer would manage and rent out the property for 9 years. This is very common practice in the French Alps because the local authorities fear the investors will not want to rent out their properties and many resorts do not have enough accommodation to meet the ever-growing demand of holidaymakers. As a result, many new-build properties will be sold with a rental agreement. 

Whilst these practices ensure a steady increase of beds in the resorts, it is generally met with a more conservative approach from the lenders as they put the rental management companies under the microscope to see how they have managed properties previously. Their concern is that the property and project must retain, if not increase, its value over time. Moreover, in the event of a client default, it is much harder for them to sell a property with a rental obligation or lease attached. This is the main reason why some banks choose not to lend on money to finance projects where the property developers and/or the rental management companies do not have a good track record.

Our Approach

The client had more leeway in terms of a deposit than usual which meant that we were able to secure a mortgage with 70% LTV on the pre-VAT price. Whilst this meant that the client had to put down a little bit more upfront, the tax was covered by the developer. This reduced both the total mortgage amount and the repayments which meant that the mortgage repayments are nearly completely covered by the rental income generated by the property.