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The AMF warns of “numerous inadequacies” in real estate investments

2024-03-06T15:35:34.412Z

Highlights: The Financial Markets Authority (AMF) reported on Wednesday “numerous inadequacies’ in real estate investment products. The AMF looked at real estate Investment companies (SCPI) with dismemberment. These financial investments differentiate the rights of investors in bare ownership, who have the property, and those in usufruct, who use the property and receive the income but must also pay the indirect costs. The income received, the fees and costs borne, the liquidity and the investment horizon are different.


The market watchdog believes that these strategies do not sufficiently take into account the different types of owners.


The Financial Markets Authority (AMF) reported on Wednesday

“numerous inadequacies”

in real estate investment products, which do not sufficiently take into account the different types of owners.

The AMF looked at real estate investment companies (SCPI) with dismemberment.

These financial investments differentiate the rights of investors in bare ownership, who have the property, and those in usufruct, who use the property and receive the income but must also pay the indirect costs.

Underlining the

“complexity”

of this type of investment, the regulator

“found numerous inadequacies in the practices”

of the four credit institutions or investment firms that it examined between April and August 2023 in a targeted control (

“ spot”

).

“The respective profiles of the bare owner and the usufructuary present notable differences”

, due to which this type of investment

“cannot be assimilated to an acquisition of SCPI shares in full ownership”

, i.e. say an investment in a placement where all holders have the same rights, notes the AMF.

Read also Keys to real estate: lots of advice for Paris and Ile-de-France

“Very limited consideration” of specificities

The income received, the fees and costs borne, the liquidity and the investment horizon are different, but, for all that, the regulator

“observed very limited consideration”

of these specificities by the controlled establishments.

The market watchdog criticizes certain companies in particular for having provided

“insufficient or even erroneous information”

to their clients concerning

“the costs and charges of these investments”

and the four companies inspected had

“a tendency to rely too much on the responsibility of the partner management companies”

, to the detriment of customers.

If “spot”

controls

are

“neither a position nor a recommendation”

, they allow the AMF to send clear messages to the Paris financial center on the

“good”

and

“bad”

practices that it identifies. .

Source: lefigaro

All news articles on 2024-03-06

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