Buying New-Build Property, Off-Plan, VEFA or ‘à la Carte'?New-built villas, off-plan properties and developments are and have always been popular in France. Here are some key numbers to understand the market of new properties. There were 222,000 new properties sold to private buyers in the last twelve months. The average price per new property is €242,620 euros (approx. £208k and $262k).
In France, buying an Off-plan property is called a VEFA which stands for ‘vente en l’état futur d'achèvement’, meaning buying a property off the plan from a developer, they are strictly regulated and usually very safe. In this article, we look at the various advantages of buying these types of properties, may this be for personal use, for investment, or both.
Recent reports have shown that sales of VEFA properties are declining, with a record number of cancellations, with the notable exception of the French Riviera and the Alps thanks to international buyers. There may be opportunities for investors as developers are looking to move their ‘stock’ to finish their projects. We’ve heard of developers offering notary fees, so look out for these types of promotions in our VEFA and Off-Plan listings.
What is Buying Property Off-Plan?Buying in VEFA or off-plan means purchasing a property – typically an apartment or a new-build villa – in advance of its completion from the housebuilder. Even before foundations are laid, property developers start looking for buyers and investors wanting to capitalise on early-bird discounts and better choices, often with a small deposit required.
The property value can go up between buying the moment it is secured and when the development is delivered. Naturally, everything in the property is brand new, up to modern standards and all new-build properties in France come with a ten-year guarantee.
Benefits of Buying a New-Build PropertyThere are many benefits to buying a new property or off-plan. Modern buildings are designed to be energy efficient and sustainable with the aim to lower energy costs, reduce environmental impact, and comply with the newest environmental regulations.
Many of these new-build properties are designed like your latest EV, with smart home systems, advanced security features, and efficient heating and cooling systems. Furthermore, buying off-plan allows investors to customise some aspects of their properties, such as finishes, tiles, fixtures, and layouts.
Some developers offer flexible payment plans for off-plan properties, allowing buyers to spread out the payments over the construction period. This can make it easier for buyers to manage their finances, especially in the current tight lending market.
Reduced Legal Fees for New Homes in FranceNotary fees or legal fees represent 2 to 3% of the purchase price of a newly built property or off-plan. Legal fees for the purchase of older properties are typically around 7 to 8%. When you read about “reduced costs or fees”, this applies to any new property acquisition in France.
A property is considered as new when its construction was not completed more than five years from today. To clarify, in 2023, any housing built before 2018 is not classified being a new property.
Buying Off-Plan or VEFA to InvestNew build property and VEFA can offer the potential for higher capital appreciation compared to resale properties, especially in urban areas experiencing growth. These new development projects are typically in up-and-coming areas, making them ideal for buyers looking to invest in prime locations.
In a market with increasing property prices, buying off-plan might allow to secure a property at a lower price before the market value goes up during the construction period. In addition, new builds are delivered with warranties and guarantees, reducing maintenance costs for the first few years. Off-plan properties, new VEFA developments and new-build real estate in France can offer a good investment opportunity for personal use and potential rental income.
What is the ‘Contrat de Réservation’?The preliminary contract, called a reservation contract, is a preliminary contract specific to a VEFA or Off-Plan. In this contract, the developer commits to reserve new accommodation for the buyer when the construction program is completed. In return for securing a good price and property, the future buyer pays a deposit. This contract is signed between the developer and the buyer.
A word of advice, commercial material have no contractual or legal value. In legal terms, this means if anything goes wrong, only the content of the 'contrat de réservation’ stands.
Legal Protections when Buying Off-Plan
French law requires that developers provide a guarantee of completion of the building or a guarantee of reimbursement of sums paid by the buyer in the event of non-completion of the project. In the absence of such a guarantee, the sale is declared null and void.
Financial Guarantee of CompletionThis Financial Guarantee may be activated in the event of failure of the developers to raise the necessary funds for the completion of his development project.
This compulsory measure obliges developers to provide a guarantee to the purchasers that the project will be finished, and that the property will be delivered to the buyers. These guarantees are supplied by banks or specialist insurance companies to cover buyers in the event of failure from developers to provide the funds to complete a building or program.
Refund or Return of Funds GuaranteeThe Return of Funds Guarantee is given by a financial organisation that undertakes, jointly with the developer, to reimburse the sale price paid by the buyer if the sale is the subject of an amicable or judicial resolution due to lack of completion. In return, after this financial settlement, the buyer cannot demand completion and delivery of the property.
Don’t Want the Wait? Buy 'à la Carte' InsteadDo you know where you want to live? Perhaps you’re on a deadline and must find a place quickly. Many buyers are attracted by older property, whether in the countryside or in major French cities such as Paris, Lyon or Bordeaux, just to name a few. French architecture is internationally renowned and almost instantly recognisable, especially in the capital city. Most buyers will be familiar with the Haussmannian style buildings and avenues specific to Paris but there are other French styles of architecture that are associated with individual regions and their cities.
Our bespoke 'à la Carte' buying service has been designed for busy people and professionals looking for property in Paris and other dynamic cities across France. Our tailor-made 'à la Carte' service provides buyers with local expertise, superb customer service and peace of mind.
There are many benefits of using a dedicated property Hunter, to begin with, they don’t sell their properties, they search the market with the mission to find the property best suited for you and your family. The property hunters will only be paid a commission when they find a property for you and the purchase has been completed. This highly focused approach allows you and the team to be extremely efficient, massively reducing the typical search time and the buying fees.
Bespoke Service or Off-Plan, Talk to the ExpertsWhile buying a property off-plan or a new-build can offer cost advantages and potential appreciation, it's crucial to research the market, the reputation of the developer, and the terms of the purchase. One risk with off-plan properties is that construction delays can occur, which might affect your timeline. It's therefore important to account for potential delays when considering the overall buying cost and budget forecasts.
If you want to learn more about our Buying ‘à la Carte' service or are interested in buying an Off-Plan property, our team of experts can assist with all aspects of finding and securing the perfect property. Please get in touch with an outline of your project, making sure to include your desired timeline to purchase and your budget. If you are only starting your search you can register to receive alerts of new properties as they come to the market.
17th September 2023
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