In 2018, 128.000 new homes were sold in France. This highly regulated sector offers homeowners solid guarantees and many advantages.
New french property development is often marketed as off plan properties. This status allows a developer to start marketing part of the development upstream of construction in order to obtain the completion guarantee (GFA).
The latter is a key element in ensuring the proper completion of the site and securing the buyer’s recourse in the event of a construction failure.
What are the advantages for the buyer?
Reduced notary fees
New development is subject to VAT. Therefore, notary fees are reduced and represent 2 to 3% of the selling price, instead of 7% on a resale property.
Low maintenance costs
No major works to be planned for several years for both private and common parts. In general, the latest technological and environmental standards have been anticipated.
All new constructions are required to comply with the latest RT 2012 thermal standards since 1 January 2013. The buyer therefore benefits from a comfortable lifestyle and energy savings for a controlled budget.
The HPE* and THPE** labels complement the RT 2012 standard and offer an additional energy reduction of 10% (HPE) and 20% (THPE). The E+C Label, launched in 2016, is currently being tested. It is attributed to buildings that produce more energy than they consume.
A personalization of your home
One of the major advantages of a purchase on plan is the possibility of customizing your property by modulating the living space, choosing floor coverings, kitchen and bathroom furniture, etc.
– New property allows an exemption from property tax for two years if it has been approved by the local council.
– The buyer is entitled to the Zero Rate Loan if it is eligible. Acquisition aid is offered subject to conditions.
– If you pay your income tax in France, you can benefit from the PINEL tax system, which allows you to a tax reduction over 6, 9 or 12 years under conditions
The possibility to recover the VAT on your property price
In some case, if you are in a tourist area like in the French Alps, Provence, Paris or French Riviera, you will be able to contract you with a company, a commercial lease opening for you the possibility to recover the VAT on your property investment. In exchange you will engage into a lease with a company who will in return manage and rental your property as a furnished property. You will receive an income and you are keeping some usage for you and your family. This is a softer version of a leaseback property.
*High energy performance **Very high energy performance
How to purchase a new built ?
The buyer reserves his apartment or villa through a reservation contract that binds him to the seller (developer). The document includes the agreement that has been reached on the price, conditions of sale and the property itself. Attached to the RC are the overview plan, the floor plan, the descriptive notice, the parking plan and administrative documents such as ESRIS. The buyer then transfers the security deposit to the notary’s account, which generally corresponds to 5% of the sale price.
The deed of sale
When both parties have met all the conditions and the conditional clauses have been lifted, the notary hands over a draft of the deed to the purchaser. He also calls for the fund to be transferred to his office, the day of the signature, the amount will depend on the construction stage of the property
Progress of the work
The buyer officially becomes the owner of his property on the day of the deed of sale, even if he does not have immediate enjoyment of it. It will pay the promoter directly into a centralized account as the construction progresses; these are the calls for funds. The purchaser may request modification work (TMA) from the developer, which will result in separate quotes for the additional works.
Once the property is completed, the buyer is invited to the meeting for the handing over of the keys. On this occasion, the buyer is invited to visit the property and, if necessary, to make a snag list if he finds any non-conformities with the descriptive notice.
Often, developers organise a visit one month before the delivery date in order to anticipate possible snag list.
WHAT ARE THE GUARANTEES FOR THE BUYER?
BEFORE THE END OF THE CONSTRUCTION
The completion guarantee
It protects the buyer in the event of default by the developer (bankruptcy for example).
In this case, the bank or insurance company will take over so that construction can continue and the project can be carried out.
ONCE IT IS COMPLETED
The guarantee of perfect completion (1 year)
If the buyer notices anomalies during keys exchange, it will be recorded onto a snag list. It has one month after the exchange of the keys to notify the promoter of any malfunctions. The promoter is required to repair all disorders noted within one year. This guarantee also covers sound insulation, so the buyer has 12 months from the date of taking possession of the property to report any acoustic defect.
The 2 years guarantee
All equipment (radiators, shutters, valves, etc.) are guaranteed by the promoter for two years.
The ten-year guarantee
The developer has taken out damage insurance to cover the cost of the repair work for ten years.
It covers the solidity of the structure and the inseparable elements of the equipment, the unsuitability for the intended purpose and the collapses resulting from a construction defect.