Buying Off-Plan - An introduction
If you’re planning to invest in French luxury real-estate, buying property off-plan might be just the opportunity you’ve been looking for. France’s new-build sector is highly regulated by the government and there are a number of advantages to purchasing property off-plan.
Choose a brand-new apartment in the centre of town or design a contemporary villa in the hills with your developer. Whatever type of property you’re looking for, the off-plan option is a great way to build your dream home on the French Riviera.
Recommended for you: Mougins Property Developments
We’ve put together a quick guide to the off-plan procedure below. Read on to find out more and decide whether this is the right purchase option for your next real-estate investment in France.
What is buying Off-Plan exactly?
Known in France as “vente en l'etat futur d'achèvement” or VEFA, buying off-plan is exactly what it sounds like. Simply put, you will be purchasing a property which has not yet been built from a developer.
How do I go about buying a property Off-Plan?
The off-plan purchase process can be broken down into several stages:
After finding a development which suits your real-estate requirements, you’ll sign a preliminary contract. This is known as a "contrat de réservation".
After you sign the preliminary contract, you will pay the developer a deposit of around 5%, known as the "depot de garantie".
You will then enter into a ten-day cooling off period. During this time you can change your mind and cancel the contract without losing your deposit.
Once the cooling-off period is over, it’s time for the VEFA contract. This will be drawn up and signed in the presence of your Notaire.
VEFA contract signed, you will start to make stage payments as construction progresses. A typical time frame for the payments is as follows:
- 5% at the signing of the contact
- 15% when building work starts
- 15% when the foundations are laid
- 20% when the floors are laid
- 10% when the upper flooring is laid
- 5% once the building is watertight
- 15% when the partition walls are completed
- 5% when the tiling/carpeting is finished
- 5% upon completion of work
- 5% at the key handover
The penultimate stage is known as the handover or "procés verbal de reception". At this point you are not yet the official owner of the property but you can ask the developer to fix any snags or issues you may have noticed along the way.
Then, once you receive the keys to your new property from the developer along with the "procés verbal de livraison" you will officially take delivery of your new home and become its legal owner.
All that said, for our Mougins developments, the arrangement is even better. You just need to pay 5% upfront and the remaining 95% when you get the keys and sign the deed.
Which type of properties can be purchased Off-Plan in France?
You can buy pretty much any type of property off-plan across France. New developments are typically situated within a city centre, near the coast or in ski resorts. So, whether you’re looking for a villa on the French Riviera or a ski chalet up in the Southern Alps, you’ll have plenty of off-plan properties to choose from.
We currently have five Off-Plan villas in Mougins which you could consider: Mougins Property Developments
How will I know what my future property will look like?
While buying off-plan does require a fairly good imagination, you won’t be purchasing a property sight unseen. Your developer will provide a model of the development, architectural drawings and an artist's impression of your future home. In some cases, they will also have a showhouse for you to visit, although this is still fairly rare in France.
Will I have any say in the design of my Off-Plan villa or apartment?
Yes, this is one of the major advantages to the off-plan process. Unlike purchasing an existing property, buying off-plan allows you to customise the design and decor of your new home to your own specifications.
What are the advantages to buying Off-Plan rather than a classic resale?
There are quite a few advantages to buying an off-plan property in France. Here are the main benefits:
1) The level of consumer protection in France
The off-plan sales procedure is strictly controlled under French law. The purchase process includes a clause known as the “garantie d'achèvement”. This clause guarantees that the building work will be completed should your developer go bankrupt, fail to complete the work on time or to/for the agreed standard or price. That means that there will be no nasty surprises for you the buyer, during the purchase procedure.
2) The building guarantees included in the VEFA contract
When it comes to building guarantees, the law is very much on the side of the owner in France. According to the terms of a VEFA contract, your developer is required to give a one-year completion guarantee to cover any snags after you receive the keys to your new home. They are also required to provide you with a
They are also required to provide you with a two-year guarantee for all the fixtures and fittings. And finally, they must also supply you with a ten-year structural guarantee for your property ensuring that you won’t need to pay for any building work for your new home for quite some time.
3) Lower notaire fees
One of the main advantages of buying an off-plan property in France is saving money on administrative fees. Notary fees for off-plan or new build properties are fixed at 2-3% rather than the usual 6-7% for property over 5 years old.
4) No Property Ownership tax for the first 2 years
Similarly, when buying an off-plan property in France, you will be exempt from paying the Property Ownership tax or Taxe Foncière for the first 2 years after purchase.
5) Excellent return on Capital Gains
Another benefit to buying off-plan is the potential for capital gains once your property is finished. As building work reaches completion, the value of your property will hopefully rise whilst the purchase price remains the same. Therefore should you decide to sell, you’ll benefit from the rise in value without having to carry out costly renovations to your home.
6) The very latest construction materials and techniques
New builds in France must conform to the latest construction rules and regulations. Therefore your property will come with low energy consumption plus high-quality sound and heat insulation as standard.
7) Customised design
As previously mentioned, buying off-plan allows you the luxury of customising your new property. From designing a fabulous open-plan kitchen to an ultra-luxurious ensuite bathroom, it’s entirely up to you.
And are there any disadvantages to purchasing property Off-Plan?
While the off-plan purchase procedure is strictly controlled by French law, there’s always the possibility of hitting a bump in the road. Potential problems may arise if your developer takes longer than planned to carry out the construction work. Delivery dates will be pushed back which could be a problem if you’re planning to use your property as a rental investment.
I’m interested in purchasing an Off-Plan property in France, what’s the next step?
As with any real estate investment, it’s important to get expert advice regarding your future purchase. A notaire will be able to help when it comes to reading the technical and legal fine print and we are always on hand at Beauchamp Estates in Cannes to give you all the information you need. Get in touch.