What to consider when buying off plan property in France and how you go about it
There are thousands of people who come from Britain or other countries to purchase property in France every year. France is one of the most favoured destinations for those who are either seeking a second home or a new, ex-patriot lifestyle thanks to the beauty and diversity of its landscapes, its historic cities, its fine quality of life (Life in France), its excellent, temperate climate (Weather in France), its celebrated health care system (Health care in France) and its wonderful food and wine.
Many British buyers traditionally sought old, country properties in a state of disrepair, in order to renovate them and to restore them to their former glory (House Renovations in France), and there are fine examples of these all over the country. However, there are other buyers, equally enamoured of France, who do not share this passion for the blood, sweat and tears of renovation, and who prefer to buy a squeaky clean, brand new home. Of these, an increasing number are opting for the "buying off plan" option, seeing the advantages associated with this type of purchase and taking advantage of them.
It really is as simple as it sounds. Buying a property off plan just means that you purchase an unbuilt property from looking at the plans. It can be daunting, unless you have a good imagination, having to envisage the final result without being able to see more than architects' drawings and artists' impressions, but many developers can show you either previous developments similar to the one you are considering, or even better, a show house of the type you are buying.
The process of buying off plan is relatively simple.
1. You sign a preliminary contract, known as a "contrat de réservation".
2. Immediately after signing the preliminary contract, you pay the deposit called the "depot de garantie". This is usually 5%.
There follows a seven-day cooling off period, during which you can withdraw from the contract should you wish, without risking your deposit.
3. The next step is the signing of the VEFA contract. This must be drawn up by, and signed in the presence of, a Notaire.
You then make your stage payments as agreed with the developer in the contract. Having paid a 5% deposit, 25-30% is payable once the foundations are laid (at this point you have the all important bank guaranteed purchase certificate). Further stage payments are then made as per contract. These can vary from development to development.
There are then two final stages to completion.
4. First comes the handover, formally called the "procés verbal de reception". At this point, any nit picking can still be done. You are not yet, officially, the owner of the property.
5. This doesn't occur until the acceptance of delivery or "procés verbal de livraison", which is the last stage in the buying of off plan property.
There are many advantages to buying off plan property in France, and these should be carefully considered when making any house purchase decision.
One of the first and most obvious advantages of buying property off plan is that you stand to make a considerable capital gain as the property is built. In general (although not always) the value of the property will rise as it reaches completion. Once you have agreed your price, you stand to benefit from the rise in value without lifting a finger. (Capital Gains Tax in France on Property.)
Another advantage of buying off plan in France is that you will benefit from a lower fee from your Notaire. Off plan and new build properties only attract fees of 2.5 to 3.5%, in place of the more usual 6 to 7%, representing a considerable saving on a large investment.
Buying property off plan also offers you more choice in the finish and décor than buying an existing property. Most developers are happy for you to dictate points such as these, but check the contract carefully before assuming that this will be the case. Check carefully what is included. Some developers include a kitchen, but many do not as this is very much a matter of personal taste. However, a developer may be happy to include the cost or partial cost of a kitchen in the price. Tiles, carpets and bathroom fittings are usually included, and you are notified when the project is ready for you to choose these.
There are no guarantees, but the chances are that your neighbours will be similar to yourself in many ways as they have actively chosen the same type of property, the same location and are paying the same sort of price for their property. This doesn't mean that you will necessarily become best friends, but it does give you a head start!
French mortgages are notoriously hard to get, in comparison with those in the UK, so the fact that it is easier to obtain a French mortgage for an off plan purchase is a great help.
France is a very cautious country and builds in safeguards into almost everything it does, which is a huge advantage for the consumer in the purchase of off plan property. For example, the process by which you purchase this type of property guarantees that after a certain point of the development/payments, whatever may happen to the developer (eg: if he goes bankrupt) the property officially belongs to you and will be finished to the agreed standard by another builder appointed by the bank. You cannot lose your money or your property after this point, nor can the price be raised.
Another safeguard lies in the ten-year building guarantee rule. Here your property is guaranteed free from building defects for ten years by the builder.
A final advantage of buying off plan property in France is the fact that you are paying for the property in stages or stage payments. This means that as the buyer, the money that hasn't yet been paid to the developer can still be working for you while the property is being built.
As with any property or other large purchase, buying property off plan needs some forethought and care in order to safeguard yourself. It sounds, on paper, a tenuous agreement, as you are agreeing to pay a large amount of money to buy something that does not yet exist, on a plot of land that you do not own. So, is it safe?
There are well documented problems regarding off plan purchase in Spain and several other counties, however, the good news is that France has a very good record in this respect. Of all the European countries you might be considering, France's much vaunted consumer protection laws give you the most security.
As with any contract don't skimp on reading the small print in the contract. Missing something vital could cost you a lot of money, and once you have signed, you are liable to the terms of the contract. Ignorance is no excuse in law.
Even if you are pretty fluent in French (the language is both technical and legal), and especially if you are not, it is advisable to have an independent expert adviser overseeing all phases of the agreement. Do not rely on your Notaire to do this, it is not his job.
French law is pretty categorical, and if you have signed a contract that states you will pay for the property on an agreed date, you will have to do so, whatever other situations may arise in the meantime. However, French law also allows for the inclusion of a number of "get out clauses", which you should think about building in if there is any chance they may apply to you. For example, if you need a mortgage to make the purchase and this is not fully in place before you are asked to sign the contracts, be sure to include the clause that allows you to withdraw from the purchase should the mortgage fall through. There are other possible "get outs" too, and you should take advice on these before signing anything.
To keep an eye on the progress of the project, you can ask to have a right of access to the site along with your architect or adviser, and you are well advised to do this so that you are kept informed first hand of any problems/changes to the schedule.
Overall, buying property off plan in France is quite straightforward, but due to the complicated language issues, and the nature of contract language even in your native tongue, expert advice is always recommended. That said, buying off plan is becoming more and more popular, and is certainly worth considering if you are seeking a spanking new property finished to your own specification.
New build property in France
Buying a French
Property - The Fees
French Tax Changes in 2011
Moving to France - how to go about it
Joanna Simm moved to the Languedoc area of south-west France in October 2004 having found her property through French Property Links.
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