If you are looking to build a house in France, one alternative to a self-build project, is to buy a property off-plan, direct from the property developer. Whilst this is the simplest option for constructing a house in France and the property developers themselves will be able to assist you setting up the finances, there is some hidden factors that you should be careful about before embarking on this option.

I recently spoke to a number of experts on the subject of buying off-plan through a a Developer in France. Paddy Gibbons runs the international real estate agency, Artaxa Immo, which is based in the South of France. Paddy's agency has been in operation since 2008 and he has a portfolio of properties ranging from renovation projects, land for sale, traditional houses and apartments, as well as off-plan Development projects. Olga Sanina & François Brunner, run a successful Architect practice in Carcassonne, South France. Marseillan Developer

Buying an off-plan house in France

An alternative option to a self-build project or buying an existing house or apartment, is to buy a property off-plan, direct from the property developer.  Whilst this is the simplest option and the property developers themselves will be able to assist you setting up the finances, there is some hidden factors that you should be careful about.

Paddy Gibbins, cautions buyers going down the off-plan route. In particular he warns potential buyers to be aware of what is included in the build costs and what is not. As Paddy states

"most new build construction prices relate to the delivery of a completed shell of the building plus services - water, electricity, sewage".

Paddy estimates that on top of the new build costs you will need to add around 20-25% for finishing the property. 

You will obviously see lots of glossy brochures from the developer showing flamingos walking around the swimming pool and stunning high-end kitchens, but this is not what you are going to get delivered. The kitchen and bathroom fittings are often not included in the final build costs and even if they are, you need to check the quality of units that are planned to be installed. You will often find that the cheapest possible fixtures are used. In addition, whilst the Developer may advertise the building plot online and even be able to show you plans of where your prospective house will be located in the development and the different design options, the reality is that the Developer will only normally have an option to purchase the building plot. The building plot will not be purchased until you put down a sizeable downpayment.

The other thing that you need to consider is the longer term valuation of your new build. Paddy states that

"older properties tend to keep and maintain their value, with only slow growth in value unless there has been a spectacular refurbishment".

For new-builds however, there is a sharp increase in value up to the 10-15 year point, then the property value levels off before declining in relative terms. The reason for this is because whilst there is a limited suppy of old stone properties, for new builds, more new houses keep on entering the market each year. The newer properties are able to benefit from developments in building materials and the fixtures and furnishings are less likely to need being replaced. Therefore the long term price projection for your new build resembles a flattened upturned 'U' shape.

However, in recent years Paddy has seen a change in the French property market. He says

"it used to be the case in France that it was cheaper to build than to buy an existing property, but in recent years this has been turned on its head and due to an increase in land prices and falling property prices, it is now marginally more expensive to build than buy".

Property taxes on new build houses in France

In France there are two main property taxes payable for new build purchases. In total these taxes amount to just over 20 per cent of the value of the property.

Arranging a mortgage in France for a new build

When investing in a new build home in France, there are three ways to raise the mortgage equity:

1. against an existing property in your country, providing there is sufficient equity;
2. against the French property;
3. a mixture of both.

Mortgage on your main property

Raising capital against your principal property (in another country) is usually the cheapest option. The mortgage funds are raised either by taking further borrowing on the current mortgage or by re-mortgaging to another lender. The fees involved are relatively small and the process is straightforward and familiar.

Taking a Mortgage on your French Property

Raising a mortgage secured against the French property allows buyers to purchase a property without putting their principal home at risk. Although the costs are higher, it is an attractive option, with historically low interest rates. There can also be tax advantages if you let out the property. This can be a bit tricky if you have no financial history in France, but the French banks are usually receptive to foreign investors. French Mortgage calculations vary between the lenders. Some banks have a higher minimum loan size or lower maximum loan value. Banks generally consider loans from between 65 to 85% of the value of the property. Generally French banks work on a principle that the total of the French mortgage plus any other borrowing or rent should not exceed a third of the buyer's gross monthly income. For most foreign investors, the bank would look for you to put down a sizeable equity deposit.

Hybrid mortgages

A final alternative is to raise money against your principal home and your French property. This is popular with purchaser who do not have large deposit in savings or people who want to keep their savings intact. Basically, the deposit and costs are raised on your principal home, limiting the amount of equity; while the difference is raised against your French property.

I hope that I have given you some food for thought about considering the South of France as a destination for investing in property. If you would like to discuss the concept in more detail, please reach out to me on the contact details below. Further information on the French property market in South France can be found from the following resources: 

• For more information about French house prices see House prices in France 2022-2023 
• For an analysis of the housing market in France, see French Property Market 2023
• Read about the Best Places to buy investment property in France 
• For information about a tax efficient vehicle for operating a rental property in France, please read Renting out furnished property in France.

Our business partner, Artaxa RE/MAX, is an international real estate agency based in the Languedoc region of the South of France. If you would like to discuss suitable towns and villages in the South of France for a property investment, then please call Jane Laverock on +33 6 95 50 19 21 or email her at Jane Laverock. 

Please remember that Jane's speciality is the property market in the South of France. For specific questions about the local property market in other regions of France, you may be better to contact a local Agent from an International Real Estate Agency (such as Century 21 or Orpi).