New Building
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- 1. Why choose New Builds ?
- 2. Guarantees on French New Builds
- 3. Visiting New Builds on the French Riviera
- 4. French New Build Reservations
- 5. The deposit on a New Build property
- 6. New Build stage payments
- 7. Financing your purchase
- 8. The French Notaire
1. Why choose New Builds ?
At Apartments & Villas we have seen the demand for New Build property in France increase dramatically in the past few years. There is more demand than supply.
A well located development will sell 75% of its properties before the foundations have even been completed!
The benefits of purchasing a New Build property are numerous: affordable, low maintenance, lock up and leave, stage payments, good letting potential and good capital appreciation.
French developers are required to have a bank guarantee in place for each of their residential developments. This guarantee is provided in your Deed of Sale to ensure that the new development will be completed to the advertised standards even if the developer or construction company gets into financial difficulty. In addition contracts are drawn up in accordance with the French « Code de la Construction et de l’Habitation ». This legislation sets out very clear terms and conditions and is extremely protective of the purchaser.
2. Guarantees on French New Builds
When you purchase a new property in France off plan a number of guarantees are provided. These ensure your protection and provide courses of action to take should you discover any faults or defects once you have taken possession of your property.
New property in France must comply with modern building standards and regulations. This ensures low maintenance and low running costs.
Guarantee of Completion (La Garantie d’Achèvement)
A French property developer or construction company is required by law to take out a completion guarantee policy with a financial institution. This policy ensures that construction of the French property will be completed in the event of the developer or construction company going bankrupt.
Ten Year Guarantee (La Garantie Décennale)
The construction of your new property in France is guaranteed for ten years effective from the key handover. The guarantee covers any disorder that compromises the structural solidity of the property, such as the roof or walls.
Guarantee of Perfect Completion (La garantie de bon fonctionnement)
This is a two year guarantee with effect from the key handover; this guarantee covers any defects that become apparent with the fixtures and fittings within your property, such as flooring and heating systems.
And there is a one year perfect completion guarantee valid from the key handover; this guarantee covers any faults or defects noted on the "procès-verbal" drawn up at the time of the key handover with your French developer. After you have one month to add any further defects to the snag list and this needs to be sent on to your developer by registered post.
Noise and Insulation Guarantee
New Build property must comply with strict noise insulation and thermal insulation requirements which are covered by this specific guarantee.
3. Visiting New Builds on the French Riviera
Apartments & Villas will take you to see your selection of New Builds properties depending on what you are looking for. And if you find the perfect property our experienced bilingual staff can offer help with legal advice and information on the locality of your choice.
Just as importantly, our property prices are all at developer's prices.
4. French New Build Reservations
After deciding on your off-plan property you must complete and sign a "contrat de reservation". This is the preliminary legal contract (equivalent to the Compromis de Vente used in Buying Process) and contains the same important clauses such as your 7-day cooling off period (Loi SRU) and the mortgage’ clause (Clause Suspensive).
5. The deposit on a New Build property
In France, payment of the deposit in the off plan buying process is again strictly regulated by law and can only be paid either to the French Notaire or into an escrow account (Compte sequestre) lodged with a bank. In either case the developer cannot access the funds until the Deed of Sale is signed.
You are required to pay a deposit of maximum 5% in order to reserve your property - this is your first stage payment. If you change your mind within your 7-day cooling off period this sum will be reimbursed to you. Should you fail to obtain a mortgage the full deposit will be refunded to you also.
6. New Build stage payments
When you’re buying an off-plan property, payments are made in stages as construction progresses.
This is an attractive benefit as the purchasing costs are spread over several months.
As a general guideline, once the 5% deposit is paid, the payments are as follows:
- 15% when building starts
- 15% at foundations stage
- 20% floors
- 10% upper flooring
- 5% water tight
- 15% partition walls
- 5% tiling/carpeting
- 5% on completion of works
- The last 5 % is payable at the key handover (delivery)
In compliance with New Build French regulations, no payment is requested between paying the deposit and signing the Deed of Sale with the French Notaire. This does not mean however, that building work is not progressing. At the time of signature of the Deed of Sale you will be required to pay the Notaire’s fees and the appropriate stage payment corresponding to the stage that construction has reached.
7. Financing your purchase
If you are raising a mortgage, investigate the options as early as possible. Most French mortgage lenders will give a decision in principle before you decide on a particular property. This will also give you an idea of the price range you should be looking at.
There are some interesting opportunities by banks offering loans of up to 80% of the cost of the new builds (called construction under VEFA) and this can include the cost of any furniture provided by the constructor.
8. The French Notaire
To purchase a New Build property in France you will have to use the services of a French Notaire who is an independent public official.
As a government representative, the Notaire’s role is to ensure that the searches on the land are carried out, the title deed and French mortgage (if applicable) are correctly registered and that the appropriate taxes are collected on behalf of the French government.
In general the final signing in front of the French Notaire, normally will take about 2 or 3 months, at which point you will become the legal owner of your property.
If you are unable to attend the "notaire" signing, you can sign the Deed of Sale by Power of Attorney.
Frais de Notaire
The legal procedure for buying off plan property is much simplified in comparison to buying an older property and this is reflected in the low fees charged, around 3%.