Once you have decided on the property you will sign a Reservation Agreement (Contrat de Reservation) and pay a deposit of between 2% and 5%. The contract will specify the building schedule and payments to be made at each stage of the construction. Normally the first stage payment will be due once the foundations are laid, at which time you will be asked to pay 25%. At this time you will sign the 'acte authentique' and become the owner of the property. The Notaire fees are payable at this time.
If you are taking a mortgage to purchase the property, the lender will pay the stage payments on your behalf. They will however check with you prior to handing over any money.
French regulations regarding the purchase of new properties are very protective of the purchaser. The developer must have a bank guarantee in place which gives the purchaser a guarantee that he will get his property - even if the developer runs into financial problems.
New properties are built to comply with modern regulations and will have a 10 year guarantee. Good insulation and low maintenance materials mean that the upkeep is likely to be low.
Key points to check in the Reservation Contract are:
What the rental percentage is based on, i.e. the price including TVA (VAT) or not (TTC or HT).
If there are any service or maintenance charges to be paid or deducted from the rent.
The cost of the furniture package which is provided, which is essential for rental purposes.
Notaire's fees (conveyancing).
There should be no charge to you from the property agents that you deal with - they are paid by the developer to assist you throughout the purchase.
You own the freehold and hence are free to sell at any time. However the amount of VAT left outstanding and any capital gains tax, which may be payable should be carefully considered if you are thinking of selling within 20 years. (See the section on Tax and Other Costs).
Can I sell during the lease period?
As the freehold owner of your apartment, you are entitled to sell your apartment at any time within the lease period, owing any pre-financed VAT on a pro rata basis. The new investor would observe the remaining term of the lease, which can be adapted to suit his/her usage needs, and may reclaim any outstanding portion of VAT.
Some of the larger developers not only build and manage their properties but also sell and re-sell the real estate to investors. They have efficient re-sales networks in place where investors may sell their properties whether during or after the lease period.