We at Coast & Country estate agency in the South of France have written this article on acquiring new property so buyers can have a better understanding of the benefits of buying a property off-plan and the process involved. In France this is known as VEFA (Vente en l’Etat Futur d’Achèvement,) and can apply to buying an apartment or a house and is rather different from that involved for an existing property.
To sum up, buying a home off-plan has several advantages including the possibility to personalize the finish, guarantees on the work, reduced finacing cost, etc.
New buildings are subject to much stricter environmental and security standards than their predecessors. They offer modern comforts (armored doors, double glazing, electric shutters, videophone, soundproofing, parking, etc…) while achieving energy savings.
In the case of an apartment no work is to needed either in the apartment itself (so moving in is easy) or in the condominium (elevator and other facilities meet the latest regulations so no cost of upgrading is to be envisaged).
The promoters are now building highly functional apartments where no space is lost, all areas being optimized. Cupboards are integrated and appliances easily find their place. Also if you reserve early enough, during or even before building starts, you will have much more freedom in the choice of fixtures and fittings: from wall finish and floor coverings, to materials for kitchens and bathrooms (and you can even perhaps join together two apartments if you find one too small, or modifiy the original plan if you do not like its layout).
New programs are subject to numerous mandatory legal safeguards to protect the purchasers from eventual defects in their homes. These guarantees are the following: the completion guarantee (“la garantie de parfait achievement” which covers workmanship and/or elements not in conformity with the specification visible at the reception, or in the following year), the guarantee of proper operation (“la garantie de bon fonctionnement” covers equipment and applies for two years after reception), and a ten-year warranty (“la garantie décennale” covers the structural integrity of the building over a ten year period).
Finally, one of the main benefits of buying a new property, despite a price/m² generally higher than in the “old”, remains financial. In buying off-plan you benefit from reduced notary fees ranging from 2% to 3% against 6% to 8% in the old). You will also receive a partial property tax (Taxe Foncière) exemption for two years, and if for rental investment, possible tax exemptions (system Duflot).
Buying an apartment off-plan consists of three steps:
Firstly a reservation contract associated with a deposit of 5% of the sale price. Otherwise called preliminary contract or pre-contract, it precedes the signature of the final contract of sale and contains detail such as selling price, floor area, number of rooms, location, quality of construction, timeframe, etc. It is often signed directly at the sales office, but can also be signed before a notary.
The second step is the contract of sale signed bfore a notary. This must be sent to the buyer at least one month before the date of signing. This is to allow enough time for the buyer to be aware of any changes since the signing of the reservation. In addition to the items already in the reservation contract, the document contains the payment terms, guarantees provided by the developer, etc.. In some cases, the purchaser may refuse to sign the sales contract and demand repayment of its deposit.
The last step is the staged payment of the property related to progress in building, but the schedule of payments cannot exceed the following totals: 5% at the start of the work, 35% on completion of the foundations, 70% when the roof is on, and 95% on completion. The remaining 5% is paid when the keys are handed over and the buyer is happy that the specifications have been respected. The buyer may be subject to penalties for late payment at a rate not exceeding 1% per month of the amount due.