For expatriates eyeing a new build in the picturesque locales of France, “VEFA” (Vente en l’état futur d’achèvement) is a term you’ll become intimately familiar with. VEFA, or buying off-plan, involves purchasing property before its completion. This process is well-regulated in France, providing a secure pathway for acquiring modern, up-to-standard homes directly from developers​¹​. 

Financing VEFA Properties

Financing a property in VEFA is possible and offers several advantages. Some developers present flexible payment plans, allowing you to stagger payments throughout the construction period, easing the financial burden in the current tight lending market​²​. Additionally, buying off-plan can come with early-bird discounts and the potential for the property’s value to increase by the time it’s completed​^3. 

Reduced Legal Fees and Potential for Capital Appreciation

Purchasing a new build or off-plan property in France comes with the benefit of reduced notary or legal fees, which are about 2 to 3% of the purchase price, compared to 7 to 8% for older properties. This substantial saving is due to the property being classified as new if constructed within the past five years​⁴​. Moreover, new builds often offer higher capital appreciation, especially in burgeoning urban areas​⁵​. 

The Reservation Contract

The acquisition process begins with a ‘Contrat de Réservation,’ a preliminary agreement where the developer commits to reserving the property for the buyer upon completion of the construction, in exchange for a deposit. This contract secures the property and price for the buyer​⁶​.

Legal Protections for Buyers

French law mandates developer guarantees for the completion of the building or reimbursement of paid sums if the project doesn’t reach fruition, safeguarding the buyer’s investment​7⁷​. 

VAT Reclaim Opportunities

When purchasing a new build, buyers are required to pay a 20% VAT on properties under five years old. However, reclaim opportunities are available for those who meet specific conditions, such as non-resident individuals and foreign entities that incur VAT for business expenses related to new constructions in France​⁸​.

Conclusion

Investing in a new build in France offers expatriates a blend of modern living standards, potential for capital growth, and financial incentives like reduced legal fees and VAT reclaims. By understanding the VEFA process, financing options, and legal protections in place, expats can confidently navigate the property market, turning their French property dreams into a reality.

For expatriates considering an investment in new build properties in France, it’s prudent to consult with a legal expert to navigate the nuances of VEFA and to explore VAT reclaim opportunities thoroughly. Blue Sky France Finance is dedicated to assisting clients in understanding and leveraging these processes for a smooth property acquisition experience.

Please Note: This article is for informational purposes only and does not constitute legal or financial advice. Always consult with a qualified professional when making decisions related to your personal finances or legal obligations.