Off Plan Property France - Buying off plan property in France
Buying off plan means reserving a property - sometimes before commencement of the build. Developers like to sell as many as possible before starting the work in order to protect themselves and in some cases to earn more favourable bank rates. In this respect if you are one of the early purchasers it is always advisable to try and understand the lead time before building.
Very often developers do not start before 70% of the proposed property build has been reserved (but this can vary). In return for this "inconvenience", prices are nearly always more favourable than buying a completed property or a resale. Remember, if you prefer to wait until you can see the finished construction, it will normally cost you more.
Prices usually continue to move upwards during the course of the build, so the sooner you sign on, the better value it is likely to be. Once you have decided and signed the contract, irrespective of the build stage, the price should be fixed.
One of the main advantages to buying off plan is that frequently you need only pay around 30% to 40% of the purchase price and often no more until completion. The final balance can be settled either by cash or by a mortgage which is often built into the purchase price.
In some cases, subject to the conditions of purchase, the contract will enable a buyer to sell the property before completion
after having paid, perhaps, only 30% to 40% of the purchase price.
For example:-
Purchase Price : € 150,000 / £ 100,000
Deposit Payable : € 52,500 / £ 35,000
Assume the property is sold before completion for € 202,500 / £ 135,000, (not an unusual return over say an 18 month to 2 year planning and build period) then the profit = € 52,500 / £ 35,000.
So, you can gain € 52,500 / £ 35,000 or a 35% return on your "investment".
Our Agencies will be happy to discuss specific new build projects across all featured opportunities.
Rental income versus capital appreciation
How do you intend to make your money - from rentals or from selling the property, either quickly or in several years time? Both have tax implications which need to be considered in the light of local legislation.
The rental returns from a property need to be carefully assessed and not over-estimated. Rentals are never guaranteed, and you should be careful not to take on something which you may struggle to pay for when it is not rented out. Look at local supply and demand.
Security
30 weeks rental per year might be a reasonable expectation; this should produce a net return of about 6%, but also means that the property may be empty for 22 weeks per year. A secure development would mean you do not need to be concerned about leaving it unattended, however thought should be given to security over the time the property is left unattended.
Maintenance
Another issue is keeping the property in rentable condition, so you will need to organize (and pay for) some sort of property management in your absence. Will the developer provide this, or will you need to source a cleaner and gardener yourself?
Capital Gains
If you are looking at selling the property, you will need to consider the current capital gains situation. For example,
capital gains tax (CGT) for non-residents in France is 35%.
It's a lot to think about, and all the factors need to be carefully considered and balanced before you make this important decision. Our Agencies can advise you on the various investment opportunities available.