Thursday, July 30, 2009
Buying a French property off-plan
Buying a French property off-plan (sometimes known as 'en VEFA' or a sale of a building not yet built) has a number of attractions. These include the chance to acquire a brand new house or apartment, constructed using the latest materials and techniques; the option to change the proposed interior design, layout, decor at the time of construction; and a system of payments by stages, usually spread over 2 years from laying of the foundations to completion and hand-over - the duration of a normal building contract.
Transaction costs (notaire's fees and land registration) are less than for existing properties, though VAT/TVA is charged on the new building and makes up nearly one-fifth of the sale price.
Off-plan houses and apartments are offered by developers, some of whom (less than 20%) are major contruction groups; while others may be no more than speculators who have purchased (or at least have an option on) some land, and are basically involved in sales and marketing of the proposed development, and later supervising its construction by an independent company. They are required to have stringent financial guarantees and a project will not normally be started until at least half of the properties have been sold. In times of slowdown in the property market, this can cause delays, and most recently cancellation of proposed projects which have been mothballed until market conditions improve.
For these reasons, if you are interested in a proposed development, you can normally sign an option, sometimes without paying a holding deposit, which is little more than an expression of interest. If sales of 'lots' proceed fairly quickly, you will then be asked to sign a reservation contract, and pay up to 5% of the purchase price in order to secure your option. This will be succeeded by a formal sales contract and stage payments over the course of construction, until completion and hand-over of your property.
It is important to visit the site of the proposed development, as promoters' catalogues can look alluring when the reality may be less attractive. If a proposed development is being built in stages, you need to ensure that future constructions do not detract from, say, the view from your property. If possible you can visit a show house or apartment, or at least visit other recently constructed developments by the promoter to check the quality of design, finishing and materials.
During the last 20 years or so, French building regulations have been tightened up, particularly in areas such as sound proofing and heat insulation. So you will benefit from these, and enjoy the prospect of having no major bills for repairs and maintenance for the next 15 to 20 years, either to your individual property or the shared facilities such as a swimming pool.
New build properties come with comprehensive guarantees including the constructor's obligatory 10 year insurance against major defects, and slightly shorter term guarantees on installations and equipment.
The paperwork can be daunting and is invariably written in French, but as with all French property sales, a notaire is responsible for handling the sales transaction, and advice should be sought. New-builds are best regarded as medium to long-term investments but come with the satisfaction of owning a modern, comfortable home.
Labels: Buying French property