France, since its birth in 486, has prided itself on being distinctively different, on doing things its own way. If the French, for example, disagree with something imposed from without, you can bet that a disgruntled Frenchman or 20 will be depositing merde all over an important road somewhere. It comes as no surprise, then, that the French property market also does its own thing, serenely continuing on its established and well-regulated way while the wider international property market has turned into something of a free-for-all as investors chase the biggest returns.

Rising to prominence on the back of this rush for riches has been off-plan property. The idea is a simple one: you slap down a deposit on a property in a development when it is little more than a gleam in the developer's eye and sell the property before it's completed, making 15–30 per cent profit in the process (minus tax, of course). Typically, the payments are made in stages and tie in with a certain point in the construction of the property, say 20–40 per cent when the foundations are laid and 20–40 per cent when the roof is on.

As with all investment-related property purchases, succeeding in the off-plan arena is all about timing and location. If you buy the right property in the right location at the right time and sell it at an equally opportune moment then you're in the money. This only works, of course, if the property market in question will generate substantial price increases over a short period of time, otherwise any minimal gains will inevitably be gobbled up by the ever-ravenous taxman. But this short-sightedness, this – to borrow an American phrase where it will be least appreciated – flip-flopping seems almost at odds with the French property market, which despite pockets of strong annual price growth, has a far more dependable hand upon the tiller. I'm tempted to refer to this approach as 'slow and steady wins the race', but really there's little racing: people buy in France because they want to move there or have a holiday home there, not primarily because they want to go in hot pursuit of property profit.

If, however, they do want to invest in new property, it's a long-term commitment. Indeed, the words 'speculation' and 'French property market' not only seem to be uncomfortable bedfellows but barely belong in the same house. So can buying off-plan in France really mean the same thing as it does elsewhere?

Surprisingly similar?
Without further ado, let's clear one thing up straight away. You can buy property off-plan in France along very similar lines to buying off-plan in Bulgaria, et al. And, typically speaking, the property will be just one of many in the development in question. Sabine Druce of new-build sales specialists Your French Property explains the process as follows: "Firstly, a contract of reservation (VEFA) is signed by both parties and the vendor undertakes to reserve the plot for the buyer who has to pay a deposit. This cannot exceed five per cent of the final price if the signature of the formal deed takes place under one year. This amount is reduced to two per cent if the signature is forecasted within two years and no deposit is due in case the sale is beyond. The deposit is put on a special account generally opened by a notaire. "The buyer benefits from a seven-day cooling off period to withdraw the contract if he/she wishes and the deposit is refunded. In case the buyer declares in the contract that they intend to apply for a bank loan and, if the loan is not obtained, the deposit is also refunded. "The titled deed can be signed only once the foundations are completed and the buyer will become owner of the existing parts according to the progress of the construction," she concludes. Exactly how much can be paid at certain stages of the build is governed by French law. Therefore, payments cannot exceed 35 per cent of the price when the foundations are laid, 70 per cent when the building is made weather-proof, and 95 per cent when the house is completed.

However, this does leave a certain scope for developers to set their own staged payments. For example, Francis Labarre of Lama, which builds developments in the Vendée, says that the company uses the following scale: "20 per cent when the foundations are laid, 45 per cent when the building is made weather-proof and 85 per cent at completion. The balance is paid when the keys are handed over. "With any request for payment, the purchaser must receive a certificate issued by the architect proving the stage of the works." So far so similar. In emerging markets, and indeed in Spain until recently, the bulk of off-plan purchasers would sell the property before completion if they can, to realise the capital growth in the property and avoid paying all of the instalments. But can you even sell an off-plan property in France before it's completed? "Owners are completely free to resale their property even if the development is not yet fully completed", Labarre confirms. This is known as selling it in L'Etat Futur D'Achevement (future state of completion). Labarre continues, "When we start a development which will be delivered in three or four phases on the same number of years it would be improper to prevent the first owners from selling their home if they wish to or are obliged to do it for various personal reasons".

Indeed, buying off-plan appears to be as popular in France as it is anywhere else. "The statistics show that 90 per cent of the new-build properties in France are bought off-plan", Labarre says. "Therefore, such properties are available across France. Of course, cities and areas with an important concentration of population have the bigger percentage but coastal areas such as the Vendée see a growing demand every year." Druce adds the following: "There are great opportunities to be had and there is a wide variety of developments. Properties will more commonly be apartments or townhouses or ski apartments and chalets and will typically range from studio apartments to two bedrooms. Larger properties tend to be rarer and when they are available sell very quickly. "The properties are usually located in a 'Residence de Tourisme' (Tourist Residence) or 'Residence avec Services' (Residence with Services) which cater for short-term lets and provide a variety of services usually to include reception, breakfast (by prior arrangement), laundry and linen services, swimming pool, jacuzzi, sauna, steam room, etcetera."

In France, then, as in other markets – especially emerging ones, there's plenty of choice. But with rapid price increases in places like Bulgaria driving the appetite for off-plan property, one would expect the more moderate – and probably sustainable – growth in France would not generate such excitement. Think again, says Druce. "Demand outweighs supply and the market moves very quickly. Really good developments often sell out within a week or two of going on the market, so it is vital to have done all your background research first as when the right development comes up you will be in competition with a great number of savvy purchasers in for a small number of apartments or houses." And, again, buying off-plan in France usually equates to a saving over buying a finished property as the developer's costs and risks are reduced – which equates to a cheaper price for the buyer. Perhaps, one may be thinking, the French property market isn't so different to the markets in neighbouring countries. There are, clearly, a number of broad similarities, but let's not be too hasty in jumping to conclusions…

Distinctively different
In France, unlike in most other countries, buying off-plan usually brings with it the opportunity to buy a leaseback property, whereby the buyer immediately leases the property back to the developer or managing company and then receives guaranteed rental revenue for nine years, usually with an optional lease extension. Although not unique to France, leasebacks south of the Channel are distinctive in that the leases are so comparatively long, hinting at the stability of the French property market – and they come with a VAT concession. This, says Labarre, "saves 19.6 per cent of the price". But not all developments qualify. "Only those offering hotel-level services are entitled to propose a leaseback purchase", he says. However, sell the property sooner rather than later and you can kiss any VAT gains goodbye as it takes a full 15 years for the gains made on the sale of your French property to become tax-free.

So although it's possible to buy property off-plan in France just as you would elsewhere, making money by selling a property before it's completed is not quite so straightforward. Druce cautions that although prices will almost certainly increase during the build phase, "Due to the complicated tax process in France and the small annual appreciation of property prices, it is generally not worth selling before completed". Moreover, it's this avowedly longer-term approach that really sets France's property market apart from the rest.

Neil Harris of TJ Constructions, which builds bespoke properties in the Redon area of Brittany (Harris points out that this also counts as 'off-plan property'), explains that the French government is wary of inviting speculation into the country's property market. "In France to limit speculation you have to be a constructor (developer), adhere to rigid guidelines, have financial backup and are limited in your field of operations", he says. "Government policy, quite rightly, tries to ensure that most people can have affordable housing rather than encourage rampant speculation and profiteering so the profit, especially for a residence secondaire, is taxed more highly the faster it is resold."

So what's behind these marked differences? "France has shown a more stable growth over time and is already an established member of the EU whilst a lot of other countries in the emerging markets still have a lot to prove in terms of long-term stability", says Druce. "These other countries are also dependent on cheap flights, whereas France is easily accessible by car." Druce also identifies another key difference. "In France, a lot of purchasers of new-build developments are French which proves that the properties are correctly priced for the local market. In other countries this isn't really the case, and could considerably affect the resale possibilities in terms of investment."

So, after all, it turns out that the French do like to stand out from the crowd – good news for all those people who want to buy property in France because of where it is or will be situated rather than how happy it will make their bank manager in the next 12 months. Vive la différence, I say!

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Article first published in March 2006