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Buying development property in France

The currency issues for buying new build or off-plan

Buying a new house in France, either your own new build design or an “off-plan” apartment or villa in a development is an increasingly popular option. But how do you avoid risking your capital on currency fluctuations when you have the initial deposits, followed by stage payments and the final completion date is not precisely known?

If, like most people, you want to end up paying only the amount you agreed to pay in the first place, then you will need to fix that amount in some way to protect against adverse exchange rate swings. Fortunately foreign exchange dealers have a number of solutions to solve this problem.

These solutions are called “Forward” transactions and they involve your dealer or broker offering you the option to buy your currency at a fixed price at some point or period in the future.

The first option is a “Fixed forward” contract which is suitable if you know the dates when you need to make the deposit, stage payments or final payment on your French property. The broker will be able to offer you a fixed price to buy Euros at each of the dates you propose. You then have the option to purchase the currency at the agreed date in the future. Although you will have to place a deposit (usually 10% of the full amount) to secure the contract it does mean that you will not have to convert or obtain the balance of the funds for a house purchase until a later date and your price is guaranteed. Should your plans change you do not have to proceed with the transaction.

The second option is a “Fixed time” option. This may be more suitable where, for any reason, you cannot be too precise about when you will need the funds. The solution is the same as for a “Fixed forward” except that the broker will offer you a date range between which you will have the option to buy currency at the agreed rate. This might also be useful if you are funding the gradual restoration of a French property and need to convert funds in stages.

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