A Guide to Buying Off-Plan Properties in France: VEFA (Vente en l’État Futur d’Achèvement)

Buying property in France can be an exciting investment opportunity, especially with the option to purchase off-plan properties under the VEFA system (Vente en l’État Futur d’Achèvement). This guide explains how the VEFA system works, its benefits, and what to expect as a buyer.


Table of Contents


What is the VEFA System?

The VEFA system, or "sale in future state of completion," is a legal framework in France that allows you to purchase a property that is under construction or not yet built. With this system, you secure ownership rights to the property as it is constructed and make phased payments as milestones are completed.


Key Steps in the VEFA Process

1. Reservation Agreement

The process starts with a contrat de réservation (reservation agreement), which secures the property for you. This document outlines:
  • Purchase price
  • Construction timeline
  • Payment schedule
    • A deposit of up to 5% of the property price is required

2. Developer Receives Their Bank Guarantee (GFA)

Once the developer has pre-sold 50% of the value of the development, then the developer’s financing bank can provide them with a bank guarantee that ensures that the development is delivered even if the developer runs into problems.

3. Signing the Sales Agreement

Once the developer has the necessary permits and financing, you sign a sales agreement before a notary. This document legally binds the developer to deliver the property as described.

4. Phased Payments

Payments are made in installments tied to construction milestones, which can vary from different developers. For example:
  • 5% deposit when signing reservation agreement
  • 20% when signing the sales agreement
  • 20% when the foundations are completed
  • 15% when the structure is completed
  • 20% when the property is weatherproof
  • 15% at completion
  • Final 5% upon handover (or held until any issues are resolved).

4. Handover

Once the property is completed, you take ownership and receive the keys. This includes a detailed inspection and a list of any final adjustments needed.


Benefits of the VEFA System

Legal Protections:
French law safeguards buyers with guarantees, such as:
  • Completion guarantee (GFA): Ensures the property will be finished even if the developer faces financial difficulties.
  • 1-year defect warranty: Covers issues identified within the first year.
  • 2-year equipment warranty: Covers problems with non-structural elements like heating or plumbing.
  • 10-year structural warranty: Covers major structural defects.

Customisable Features:
Buyers can often customise finishes, layouts, or fittings tailored to their needs and requirements.

Energy-Efficient Standards:
New-build properties must comply with modern energy regulations, ensuring better efficiency and lower costs.

Tax Incentives:
Off-plan buyers may benefit from tax incentives through the Para-Hotelier scheme, which offers:
  • Up to 20% VAT reclaim on the purchase price for properties used as short-term holiday lets for at least 20 years.
  • Tax-free rental income by offsetting depreciation over 30 years.
  • No stamp duty
  • No property tax for the first 2 years


How to Finance Mortgages For Off-Plan Properties in France

French banks are well-versed in the VEFA process and we can help you secure tailored mortgage solutions, including:
  • Phased Payments: Mortgages align with the payment schedule. The bank releases funds directly to the developer at each milestone.
  • Interest-Only During Construction: You only pay interest on the disbursed amount during construction. Full repayment (principal + interest) begins after handover.


Things to Consider When Buying Off-Plan

  • Developer Reputation: Choose reputable developers with a proven track record.
  • Guarantees: Ensure the project has a valid completion guarantee (GFA).
  • Inspection: Thoroughly inspect the property at handover to address any defects promptly.
  • Due Diligence: Work with legal and financial advisors to navigate contracts and ensure compliance.

Is the VEFA System Right for You?

The VEFA system is ideal for:
  • Buyers seeking modern, energy-efficient homes, often with luxury amenities such as spas, pools, gyms etc.
  • Investors looking for properties with rental potential and tax benefits.
  • Families or individuals seeking properties in sought-after locations like the French Alps or the French Riviera.


 

Ready to Explore French Off-Plan Opportunities?

At Worldwide Property Company, we specialise in helping buyers navigate the VEFA process. From finding the perfect property to securing financing, we’re here to make your off-plan purchase seamless and hassle-free.

Contact us today to learn more about available developments and start your property journey in France.