Buying a VEFA (Vente en l'Etat Futur d'Achèvement): advantages and disadvantages

More and more buyers are opting for the VEFA (Vente en l'Etat Futur d'Achèvement) option. This type of purchase, which involves buying a property that is under construction or not yet built, is an option often considered by first-time buyers, rental investors or families wishing to move into a a new house or apartment. However, as with any real estate transaction, VEFA has its advantages and disadvantages, and it's essential to be aware of them before taking the plunge. This article provides a detailed overview of the VEFA purchase process, its tax advantages and potential risks.

The VEFA purchase process

The VEFA purchase is based on a relatively specific mechanism. It is a form of contract under which the buyer becomes the owner of a property that has not yet been delivered. Here are the main stages in the process:

1. Signature of reservation contract

The first step is to sign a reservation contract with the developer. This document commits both parties: the developer to build the property, and the buyer to purchase it once completed. The contract includes a description of the property (surface area, plans, etc.), the selling price and payment terms. A deposit is also paid, generally between 2% and 5% of the sale price.

2. Obtaining financing

Once the reservation contract has been signed, the buyer has a period of time in which to obtain a mortgage. Financing conditions must be clearly indicated in the contract, and the sale is subject to the suspensive condition of obtaining the loan.

3. Signature of the deed of sale at the notary's office

Once work has begun and the buyer has secured financing, the final deed of sale is signed at the notary's office. This formalizes the gradual transfer of ownership to the buyer.

4. Payment by cash call

Payment for a VEFA property is based on the progress of construction. The developer makes calls for funds at each key stage of construction (completion of foundations, waterproofing, etc.). The law sets a ceiling for these calls: 35% on completion of the foundations, 70% on dewatering, and 95% on delivery of the property. The remaining 5% is paid when the keys are handed over, once the property has been checked for conformity.

5. Delivery and legal warranties

Once the work is complete, the buyer receives the keys and can move in. The developer is obliged to guarantee the property's conformity, and to repair any defects. Several warranties apply: the perfect completion warranty (for one year), the ten-year warranty (10 years) and the biennial warranty for equipment.

The advantages of buying off-plan

1. A new, customizable home

One of the main advantages of VEFA is that the buyer obtains a new property that complies with the latest construction and energy performance standards. What's more, it's often possible to customize certain aspects of the home (floor coverings, partitions, fittings) to suit individual tastes and needs.

2. Solid warranties

The legal framework of VEFA offers the buyer a high level of security. Legal warranties, such as the guarantee of perfect completion, the ten-year guarantee and the biennial guarantee, protect the buyer against any defects or faulty workmanship. In the event of a problem, the developer is obliged to rectify the defect at its own expense.

3. Tax benefits

Buying off-plan offers a number of tax advantages. Notary fees are lower than when buying an older property (around 2-3% of the sale price, compared with 7-8% for an older property). What's more, you can benefit from a two-year property tax exemption in certain communes. For rental investors, schemes such as the Pinel law offer tax reductions in exchange for renting out the property for a set period.

4. Phased financing

One of the major advantages of VEFA is that payment is spread out as construction progresses. This allows buyers to manage their budget more effectively, and avoid paying for the entire property before construction is complete.

The disadvantages and risks of buying off-plan

1. Delivery time

One of the main disadvantages of VEFA is the waiting time between signing the reservation contract and delivery of the property. On average, it takes between 18 and 24 months for a project to be completed. This can be a restrictive timeframe, especially if there are delays due to weather conditions or technical difficulties.

2. Financial risks

Although rare, there is a risk that the developer may go bankrupt during construction. To mitigate this risk, it's important to choose a reputable developer and insist on afinancial completion guarantee (GFA), which ensures delivery of the property even if the developer defaults.

3. Limited visibility of the property

Buying off-plan means projecting yourself into a home that doesn't yet exist. It's sometimes difficult to imagine exactly what the final result will look like, despite the plans and models provided. What's more, there may be discrepancies between perceived quality and reality, even if legal guarantees oblige the developer to respect his commitments.

4. Any additional costs

Some additional costs may arise after delivery of the property, such as adjustments not initially planned, or work to correct unsatisfactory finishes. What's more, although notary fees are reduced, other costs, such as those associated with customizing the home, can add to the bill.

Conclusion

Buying off-plan offers considerable advantages, particularly in terms of guarantees, tax benefits and property customization. However, this type of purchase also involves a certain amount of risk, mainly linked to delivery times and reduced visibility of the property prior to construction. To make a successful VEFA purchase, it's essential to choose your developer carefully, find out about the guarantees offered and prepare a budget that takes into account any unforeseen circumstances.