New Builds in France - A Safe Investment

The choice of new-build properties has grown so much over the past few years that it can be confusing. But buying a new-build in France is a safe bet and because the French themselves are enthusiastic about new and recent properties, you can rest assured there will be plenty of interest when you come to sell from the large domestic and international markets.

If you are not sure whether to buy in France just look at the facts. It has long been one of the most popular countries for UK property buyers; the legal sysem is safe and extremely protective of purchasers, with extra regulations applying to new-build purchases. What other country offers a seven-day cooling-off period after signing a reservation contract and paying a deposit? And a bank guarantee that you will get the property you have purchased even in the event that the developer runs into financial difficulties? These laws come into play when the building reaches foundation level and you sign the acte authentique, the completion contract.

At this point you become the legal owner of the property. If you have been comparing ‘promises’ of guaranteed rentals and potential percentage increases with other countries, including the emerging markets, you need to look carefully at what these rents are based on, whether net or gross, and what charges you may have to pay as well as how long the guarantee is going to run. Are the developers going to be able to keep their promises of high rents? In France these guarantees are offered both on leaseback and guaranteed rental classic purchase by major national French companies who have a huge portfolio of properties on their books.

They have the knowledge and experience of the market for rentals in each area and they don’t take on developments they are not sure they can let. However the fact that they have an extensive existing portfolio of properties means they are in a position to fulfill the conditions of their guarantees as they can be subsidised by their other income while things get started. Once you’ve chosen to buy, the next decision you will have to make is where in France you would like to purchase.

If you are buying for your own enjoyment you may have strong views as to which areas you would prefer to be in, but for those buying for investment, the region may be less important than the rental return and potential capital increase.

Factors to consider when buying a new-build properties should include: • your budget • size and layout of accommodation, garden, terrace or balcony • location in or near a town and amenities, close to sporting activities, the coast, or rural • your reason for buying i.e. to use personally, to rent out some of the time, buy-to-let or leaseback. If you are looking for a pure investment with a fair return and good potential capital increase, then buy a classic purchase with a guaranteed rental in a major town where the demand for rental properties from the working population is high, as well as the demand for properties to purchase.

Towns such as Marseille and Montpellier, which have had a great deal of public money invested in their infrastructure, will be more reasonably priced than perhaps Paris, but will have a similar rate of capital growth.

If you choose the leaseback option, giving you some personal use, then the ski areas are a popular choice, giving you up to four weeks’ personal use with the rest of the time guaranteed rental. Similarly properties on golf courses or near the sea make popular leasebacks. Include the value of the weeks you can use when calculating the true return on these properties.

If rental is not your main concern then buying on a development in an area popular with the French will ensure you get a good capital increase when you come to sell, plus strong demand. If you buy on a secure domaine with a communal swimming pool it will also give you the possibility of making friends. The other purchasers will be like-minded as you have all chosen a similar property, and as you will be taking possession of them at the same time, you have the opportunity to enjoy a social life that might not have been available to you had you bought an individual property on its own.

Above all, you should choose an area you like, that has activities and scenery that appeal to you, is easily accessible and offers a choice of properties within your budget for the size you require. Being within striking distance of the coast is always popular with the French and as such is a good choice to ensure a safe investment.

To sum up, major cities, the coast and ski areas, properties close to sporting facilities such as golf and fishing as well as areas of extreme beauty are recommended whether they are in the north such as Normandy and Brittany, more central like Charente and Dordogne, or the south including Provence and Languedoc- Roussillon. Buying a new property in an isolated area may not be as popular as older properties which can be so reasonably priced it would be impossible to build something new for the same price.

by Latitudes

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