How to buy a new build property?
How To Buy A new Build Property in France?
Purchase of New Build Property in France - 'Off-plan'
When buying a property that has not been built yet – ie buying ‘off-plan’ - you will need to be prepared to wait for your property, as normally building doesn’t start until much of the development is sold. You will be able to view the site and situation of your property. You may also be able to view similar properties that the developer has completed.
Occasionally we can offer a development in a refurbished property, in which case you can view the building.
Once you have decided on the property you will sign a ‘Contrat de Reservation’ and pay a deposit of up to 5%. The contract will specify the building schedule and payments to be made at each stage of the construction. Normally the first stage payment will be due once the foundations are laid, at which time you will be asked to pay 25%, making your payments so far add up to 30%. At this time you will sign the ‘acte authentique’ and become the owner of the property; the Notaire’s fees are payable at this time. For new properties there are reduced Notaire’s fees: between 2.5 – 4% of the purchase price.
French regulations regarding purchase of new properties are very protective of the purchaser. The developer must have a bank guarantee in place which gives the purchaser a guarantee that he will get his property come what may – even if the developer runs into financial problems.
As the property construction progresses, further stage payments will be requested until 95% has been paid, you should then visit the property to check that all is in order and give the developer a snagging list if necessary, before paying the final 5% and receiving the keys.
The Payment Schedule Is Normally As Follows:
- Reservation – 5% due
- Completion of foundation – 30% due
- Completion of walls – 30% due
- Waterproofing and air sealing – 20%
- Property ready for use – 15% due
A buyer can request that the bank pay the developer directly as invoices are received. In most cases French banks will allow deferment of the repayment of a mortgage until construction is complete and rental income starts.
If you are taking a mortgage to purchase the property, the lender will pay the stage payments as necessary once you have paid your contribution; they will however check with you prior to handing over any money.
New properties are built to comply with modern regulations and will have a 10 year guarantee. Good insulation and low maintenance materials mean that the upkeep is likely to be low.
New developments provide a ready to move into property and also offer the possibility of making friends as most purchasers will be taking possession of their properties at the same time, so it is an opportunity to meet like-minded people of different nationalities.
We have seen the prices of these properties rise so that their value is often higher before you even take possession. You need to be aware that many developers will increase prices every few months for the properties not yet sold on a development. Prices for new developments are not usually negotiable.