France is well known for the robustness of its property legislation – making it one of the safest countries in the world in which to buy property. Upon signing to buy a property in a development in France, the buyer pays a small deposit which is kept by the notaire in a secure account – to be paid back in full in the unlikely event that the developer ‘walks away’ from the project. You then pay part-amounts at pre-specified stages as the build progresses. A number of mandatory insurance schemes (paid into by the developers) ensures that, should they not be able to complete the build for any reason, the government steps in to ensure the project is completed, and your property is delivered as promised.
THE PURCHASE PROCESS
The buyer first ‘reserves’ the property off-plan by paying a small deposit towards it. This can be either 5% – if construction is to be finished within 12 months; 2% if it is planned to be finished within 24 months; or 0% should it take longer than that. This deposit is paid directly to a neutral government-employed ‘notaire’ and kept as a security deposit. Upon signing, you will be formally tied into the purchase of the property, and should you want to back out for any reason, your deposit will be lost. However, your deposit can not be handed over to the developer until the final completion of the sale.
2: FINANCE & DOCUMENTATION
Once you have signed the ‘reservation’ contract for your property, you are free to then approach banks should you require funding. SARL Gresigne Residence, the developers of La Durantie, will be on hand to help you should you need advice or help securing finance in France. They have excellent connections with local banks, and can help you with all the paperwork.
3: COMPLETION OF THE PURCHASE
With funding secured (called the ‘GOA’ – as explained below), you will then meet with the notaire and the developers to sign the ‘Acte de Vente’ – the official purchase contract for the property.
4: REIMBURSEMENT OF TVA
If you have decided to purchase your property via a ‘leaseback scheme’, you will benefit from a 20% rebate off the full price of the property. So in other words – you will get your tax back. Thus a property costing €550,000 would give the purchaser a tax rebate of €107,800. The developer of La Durantie, use a specialist accountancy firm to handle these rebates, thus allowing you to buy the property at a price that excludes the 20% of tax.
Those not participating in a ‘leaseback scheme’ will be liable for this tax. However, should you live in a country where you are not subject to VAT / TVA or if you pay a lower rate of tax, you will be able to claim the difference in tax back. Again, we can help you with this process.
The ‘VEFA’ Scheme
The ‘Vente en Etat Futur d’Achièvement’ scheme ensures that you are buying ‘the future state of the property’. Thus you buy off-plan and sign a contract before the work commences (as long as an external financial guarantee of achievement has been provided. Under the VEFA, the seller (Gresigne Residence) hands over the rights for the land upon which the property is to be built. The buyer then has to provide a number of payments at different stages of the build, according to a pre-agreed payment schedule.
That schedule is as follows:
5% or 2% or 0% ‘Reservation’ – depending on the length of the build
30% – upon completion of the foundations
35% – upon completion of the roof and walls
25% – upon completion of the construction
5% – upon conveyance of keys
To qualify for ‘VEFA’ – the following needs to be in place:
The land must be owned by the developer
Full planning permission must be in place
The ‘GOA’ must be in place
The ‘DO’ must be in place
The ‘GOA’ is a financial guarantee by a third party (usually a bank or insurance company) by which they guarantee to pay for the full construction of the project – should the developer not be able to complete. The ‘GOA’ thus protects the buyers by ensuring that their property and the development as a whole is finished and delivered as promised.
The ‘DO’ or ‘Dommage Ouvrage’ protects the buyer against the failings of any individual contractor working on the project. The ‘DO’ pays any claims, and then recovers the amount from the contractor’s own (mandatory) professional insurance. This ensures the project is not halted while claims are processed.