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The advantages of new build French property: financial advantages

Lower notary fees :

Notary fees (in other words stamp duty) for a new build French property are much lower than for a resale French property: an average of 3% vs an average of 6 to 8% for French resale properties.

No agency fees:

In a resale property purchase the agency fee is generally paid by the buyer whereas in a new build property purchase the agency fee is paid by the developer. Furthermore some UK-based companies speciliased in French resale property charge a fixed or variable fee to which you have to add the French estate agent fee when you buy.

When buying new build there are no hidden costs that you would have to add on top of the displayed price such as estate agent fee. This price transparency makes the choice and comparison process easier. This is not the case for resale properties which are sometimes advertised with the agent fee included and sometimes not.

Furthermore, agent fees depend on the property value according to a complex system of price scale and each agent is allowed to settle his/her own tariffs.

No extra and uncertain costs:

Above all, when buying a resale property it is difficult to know from the start the amount of renovation works required. If you are not a professional in building yourself or if you don’t have a renovation experience it is difficult to assess how much the renovation will amount to.

Therefore 2 different properties might be displayed at the same price but one might end up costing more than the other one after renovation. Some estate agents are prone to undermining the renovation budget for obvious reasons. You also have to take into account the time you will have to devote to a renovation project, as well as the coming and going from the UK.

Better capital appreciation:

Developers usually choose good locations for their new developments: booming cities or tourist areas. 70% of new developments are sold to the domestic market, at least for free hold new build. Therefore they are designed for residents and investors and must offer a good rental return.

Also a product designed for the domestic market has a better resale value. You can also be sure that when buying a property designed for the domestic market you won’t pay an artificially inflated price. It is a known fact that in some rural areas particularly appreciated by foreign customers, prices have risen above the level they would have reached absent any foreign demand.

And last but not least, in a market that in the long-term, has never ceased to rise it is interesting to pay today price for a higher value at the time of delivery (12 to 18 months later). When deciding their price list for a launch developers consider the current prices of the competing products (resale properties and other new developments on sale at the moment) but do not speculate on future prices. You can easily win the value of the notary fees between reservation and delivery.

Stage payments:

For off plan properties, payments are regulated by the government and explicitly stated in the reservation contract. Apart from the maximum 5% deposit for reservation (it is 10% for resale properties) payments are made at various stages during the building process.

Developers need to show the proof that each building stage has been reached.

This allows for a more gradual release of savings if you don’t need a mortgage. If you do need a mortgage the notary or developer will call the funds directly with your bank.

Stage payments schedule
Reservation deposit (refundable under conditions) 5 %
Completion of foundations 35 %
Completion of ground floor ceiling 50 %
Completion of last floor 65 %
Watertight 70 %
Completion of partitions wall 80 %
Tiling/flooring/heating and all other equipments 90 %
Completion of the building 95 %

The last 5% are released at keys handover.

In most towns the land taxes are reduced or free for 2 years.

This is only the case when you buy a new build French property

In the end the financial advantages of buying new build vs renovation can amount to a significant amount.