Buying new build property
If you are buying a new build or “off-plan” property the purchasing process is different to that for resale homes. A new build property is usually a property in a development which has not yet been constructed. It can also be part of an extensive renovation project being undertaken on an existing building – for example, converting a large hotel into apartments.
New build homes are generally bought off-plan because they are on sale before any construction work has started. Sometimes the property developer will want to sell all or part of the development before they proceed with any work. Therefore it takes longer for the purchase to complete than with resale, as you will have to wait for the construction work to finish. The upside of this delay is that you are able to plan your finances whilst waiting for the project to commence and of course you will be moving into a property that does not require any renovation work.
In France new build and extensive renovation work must be covered by a 10 year builder’s construction guarantee, so in the unlikely event that you find a snag with your new property you are covered for any repairs necessary. New properties also benefit from a tax break, which applies to any property aged 5 years or less. Rather than paying the usual 6-7% notaires fees and taxes you are required to pay 2-3% instead.
It is not always necessary to come out and view a new build site before making a purchase, it really depends on whether you are comfortable with the idea of buying off-plan, whether the purchase is purely an investment property or whether this is to be a holiday home that you will frequently visit.
At Ascendant we work with well-known and reliable developers who have been operating in Haute-Savoie for many years. We have all the details concerning the development and we will have visited the site to be able to confirm the exact location. We will regularly speak directly to the developer running the project and we will be able to liaise with them on your behalf regarding internal finish, plans and so on. A company based in the UK is not always in a position to do this and all too often they are happy to take a commission without following through with the detailed work and on-site visits.
The new build sale process
New build properties in the Alps sell very quickly and so it is important that you have funds available to secure your property whilst the paperwork is being drawn up.
Initially you can state that you would like to purchase the property and the developer will place it on “option” (off the market) for you for a limited time, ranging from 24 hours to a few days. At the end of the option period the developer will expect you to have transferred your refundable 5% reservation deposit to the notaire handling the sale; otherwise they may release your property for sale.
The next stage is to sign the reservation contract. This document lays out the terms of your agreement with the developer, including whether you are funding your purchase with a French loan. It will also detail the payment schedule of the project. French banks are very used to dealing with new build projects and the staged payments that are involved. If you intend to purchase your property using a UK mortgage it will be viewed as a cash purchase, so it is always worth exploring a French mortgage before making any decisions. Once you have laid down your initial 5% deposit there will usually be no further payments due for the property until work has commenced. Following the start of work there will be a series of staged payments to be made leading up to the point when you are able to take possession of your new home.
As well as the reservation contract you will be asked to sign the finalised plans of the property and a technical description. It is sometimes possible to have the plans amended before signing them, for example, to add in a second bathroom, remove a bedroom etc. The technical description details the fixtures and fittings to be used in the property, the finish of the property and any communal areas, the materials to be used and the quality or brand of any equipment being installed and so on. When both you and the developer have signed the paperwork you will be sent a copy by the notaire with the notification of your 7-day cooling off period. As with resale properties this protection is in place for buyers and works in exactly the same way.
Once your 7-day cooling off period has passed you will be bound to the sale and the notaire will commence work on the next stage. As with the purchase of a resale property you should discuss inheritance options at this stage, to ensure that the final paperwork reflects your wishes.
When the searches are complete and the paperwork is drawn up the notaire will issue the final contract with confirmation of the balance due at this stage and a date for the signing. The final signing will take place in France at the notaire’s office. You will usually complete on the purchase before taking possession of the property, as the sale process takes 2-3 months and the build time can take a year or more in some cases. If work has not started by this point you will not be required to pay the full balance on the property. Once work begins the staged payments detailed in the reservation contract will commence.
Once your property is ready to go we will contact you to let you know that you should come out to view and to collect your keys. We will accompany you to the development to meet the developer or a representative at the site. We complete a walk around of the property together and you collect your keys – and celebrate!