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New build or resale? It’s a thorny question. This article is a basic introduction to new build property in Languedoc, and the benefits of buying off-plan. Read it and then decide if a new build home in Languedoc, the south of France, could be right for you.
First of all, let’s define our terms. By new build, we mean a brand new home, built within a property development in Languedoc and bought off-plan (“self build” is the term often used for brand new, individual homes built on single plots – but we’ll tackle that subject another time). On this site, “resale” property means anything that is older than five years (although technically a new build home becomes a “resale” as soon as it is sold on by its first owner).
According to agents and mortgage providers, overseas buyers - and Brits in particular - are waking up to the benefits of French new build property (Penny Zoldan of Latitudes says that sales of new build homes only represented around 10 per cent of her business in 2000, but that figure has grown year-on-year to around 30-35 per cent today), so how come this surge of popularity for new build?
One benefit of buying new is that you get to choose your property type – villa, single or double storey house, apartment within a block, or anything from a studio to a four-bedroom town house – the choice is yours. With terrace, patio, balcony or private garden? Buying off-plan is a bit like ordering a pizza – do you want the regular option, or should you go family-size? Do you want extra onions on it? No cheese? Some times you can also have a say in the fixtures and fittings, depending on the project.
Once completed, a new build home in Languedoc is ready to move into, unlike older resale houses that could need months of work to make them comfortable or at least habitable. Of course, you have to allow a good 12-18 months between signing the reservation contract and getting the keys to your French home in your hot little hand (Rome wasn’t built in a day, you know).
Another new build bonus is that repairs and maintenance are likely to be very low (hell, the thing’s only just been built, what could possibly need fixing?). Your new Languedoc home comes with a ten year construction and structural guarantee as standard, which is nice. All mod cons like double glazing, central heating, sound proofing and thermal insulation can be expected, too.
When it comes to forking out the euros, the cost of buying new build can be cheaper than resale, depending of course on where in Languedoc and what you’re purchasing. What you have to weigh up is the purchase price of each, plus any work needed to bring an older home up to scratch, and from then on in, the on-going cost of running either property. Renovation budgets are notoriously hard to define, so by comparison, new build purchase costs are generally easier to fix, and the on-going maintenance costs payable by you, as a co-owner in a copropriété are defined in your sales contract.
Another benefit to buying property new in Languedoc is staged payments – in most cases, five per cent is paid on signing the reservation contract, with a further payment of fifteen per cent when building starts. Another fifteen per cent is paid on completion of the foundations, twenty per cent when the floor goes down, ten per cent for upper flooring, five per cent when the property is water-tight (i.e. the roof goes on!), twenty per cent when door and windows are fitted, five per cent on completion, and a final five per cent payable when the keys are handed over (percentages and stages are not set in stone by the way, so don’t be surprised if they vary a little from one developer to another; they will be specified in the reservation contract).
New build can mean savings on the tax front, too. Your taxe foncière (property ownership tax) bill is reduced for the first two years, for starters. Value-added tax (known in French as TVA or taxe à la valeur ajoutée) at 19.6 per cent is applicable to new constructions, but buying through a leaseback scheme means you can claim back the VAT by letting the property through a management company for a fixed time period of 9 – 11 years, with a number of weeks each year for personal use and a guaranteed rental income.
More good news is that a recent change in French law means that if you own a leaseback property in Languedoc and decide to sell, you’re no longer liable to repay any of the VAT rebate either, provided the purchaser continues with the leaseback scheme.
People who have bought off-plan in new developments in Languedoc often talk about how straightforward the process is. After all, you’re buying from a developer rather than an individual, so you can expect the process to be smooth and professional at the very least, and the involvement of other buyers puts you in a strong position with the developer.
Once you’ve settled on your site and design, there’s not much else to worry about: new build homes in Languedoc, south France, are delivered to a standard specifications which includes a fitted bathroom, floor and wall coverings, and heating. Plumbing and electrics are provided in the kitchen, and in some instances, the kitchen is fitted with a sink (the fitting of appliances and units is usually left to you, the buyer, to arrange), so apart from mulling over the choice of bathroom tiles or some other detail of the finishing (if this is an option – not all developers allow buyers to have say in this), you can sit back and wait for your home to be delivered.
What sort of money are we talking for a Languedoc off-plan property? It all depends, as ever, on location, but around €150,000 is a good starting point in the Languedoc, where €140,000 will buy a one-bed apartment of around 45 square metres in a residence with parking, within walking distance of Perpignan city centre. Investors could pick up a one-bed apartment in the Montpellier suburb of Castelnau-le-Lez from €132,000, or further up the scale, €280,000 will bag a three-bedroom villa in a development fifteen minutes’ walk from the upmarket, medieval town of Uzès.
On top of the purchase price, you’ll need to allow some extra for notaires’ fees (a notaire is the French government official responsible for overseeing all property transactions), but these are cheaper for off-plan properties than for resale homes (around three to three and a half per cent, instead of seven or eight per cent) and there is no tax to be paid as new build property prices include the VAT.
If there’s one big stumbling block with new build, it’s that What You See Is Not (Quite) What You Get (Yet). What you see is a building site. Not pretty. So you have to be able to close your eyes and visualise the end result, warts and all. Developers will happily provide artists’ impressions and architects’ drawings, but take them with a pinch of salt – funnily enough, the sky is always azure blue, and the homes are surrounded by a veritable jungle of flowers, plants, mature shrubs and majestic trees. More realistically, a trip to see one or two completed projects built in Languedoc by the same developer can be helpful – have a good look round, inside and out if possible, and check out the build quality and attention to detail.
Just to distill all that down - here's what you really need to know:
- Buyers choose their Languedoc property “off-plan” (the French call it VEFA – vente en état futur d’achèvement).
- Prices are non-negotiable but are often cheaper than resale homes; payments are made in stages.
- The buyer signs a reservation contract and pays a five per cent deposit which is held by the notaire (the French government official responsible for the conveyancing of all property transactions). Allow 12–18 months in Languedoc from signing a reservation contract to taking possession.
- After the buyer has paid the deposit to the notaire a seven-day cooling off period ensues, during which the buyer can withdraw, and after which the contract becomes legally binding. If the buyer pulls out after the seven-day period, he forfeits his deposit.
- Once the foundations are laid the purchaser pays around 25 per cent of the total purchase price, signs at the notaire’s office, pays his fees (usually around three per cent, compared to about seven per cent charged on resale property) and becomes the official owner of the property.
- Further staged payments are made as the building progresses (you are entitled to visit and check the work).
- If you have taken a mortgage on your Languedoc property, the mortgage company will take over the payments once you have paid your contribution.
- The purchaser usually keeps five per cent of the total price in hand until the final inspection visit; once the snagging list has been completed, the final installment is paid and the buyer is given the keys.
- As the owner of a new-build property in Languedoc, you are exempt from property tax (taxe foncière) for two years from January 1 following the completion date.
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