In this article
What a VEFA is
In a VEFA, the buyer acquires the land share and the existing works at the date of the contract, and becomes owner of the rest progressively as construction advances. The developer undertakes to complete the building and deliver the home by an agreed date. The buyer pays in instalments linked to progress.
Luxembourg law surrounds this arrangement with specific protections, because the buyer pays for something that does not yet exist.
When a VEFA can be signed
According to Guichet.lu, a contract to sell a building to be constructed can only be concluded once the required building permits have been issued, and it must be made by notarial deed. A glossy brochure and a show flat are not enough; the permit must exist.
What the contract must contain
The law lists information that must appear in the contract, on pain of nullity. It includes:
- the identity of the owner of the land and of any existing construction;
- the date and conditions of the building permit;
- a description of the property and the degree of completion agreed;
- the price and the payment terms;
- the delivery deadline;
- for a VEFA, the guarantee of completion of the building.
Read the technical description carefully. The difference between "fitted kitchen" and "kitchen connections" or between "parquet" and "floor covering to be chosen" can be several thousand euros.
The completion guarantee
The central protection in a VEFA is the completion guarantee (garantie d'achèvement). It ensures that the building will be finished even if the developer runs into financial difficulty, typically through a guarantee provided by a bank or an insurer. The contract must include it.
Ask who provides the guarantee, and read what it covers. It is the reason a VEFA is a reasonable risk rather than a leap of faith.
Reservation contracts
A VEFA is often preceded by a reservation contract (contrat préliminaire), in which the developer reserves a unit for you in exchange for a deposit. Guichet.lu specifies that this deposit may not exceed 2% of the provisional price, and that it is returned if the final contract differs significantly from what was reserved or if the sale does not go ahead within the agreed time.
A reservation is a useful way to secure a unit in a popular project while you arrange financing. Keep the deposit within the legal limit and get a copy of the reservation terms.
Paying in stages
Instead of paying the full price at signing, you pay a series of instalments as construction reaches defined stages: foundations, structural work, roof, finishing works, delivery. The schedule is set out in the contract.
Two points to check:
- Price revision. The contract must state whether the price can be revised, and how. Guichet.lu notes that where revision is linked to a construction cost index, the developer may apply an increase of up to 2.5% to the whole of the payment instalments. Ask how revision has been applied in the developer's previous projects.
- Your mortgage. Banks release funds in tranches as instalments fall due. During construction you may pay interest on the amounts drawn while still paying rent for your current home. Build that overlap into your budget.
Keep a file. Every call for payment should come with a certificate confirming the stage reached. File them. They are your record of what you have paid and why.
Delivery and the snagging list
At delivery, the developer hands over the home and you inspect it together. Note every defect, however small: a scratched window frame, a door that sticks, a missing socket. This reception is the moment to have them recorded. Bring a checklist, a torch and, if you can, someone with building experience.
After delivery, statutory warranties cover defects for defined periods, longer for structural defects than for finishing work. Report problems in writing as soon as they appear.
Taxes and costs specific to new builds
- Registration duties in a VEFA generally apply to the land and the part of the construction existing at the time of the deed, not to the whole future building.
- Super-reduced 3% VAT can apply to the construction of a principal residence, within a cap of €50,000 of tax advantage per home. The developer can apply it directly with the right approval. See our guide to the 3% housing VAT.
- The 2026 announcement. On 16 July 2026, the government announced a temporary exemption from registration and transcription duties on the construction part of homes bought before they are more than 80% complete, for three years, subject to legislation. Check its status with your notary.
Our guide to registration duties and the Bëllegen Akt explains how duties and the tax credit interact.
The advantages
- A new home built to current energy standards, which means lower heating bills and a better energy class.
- The possibility of choosing finishes and, sometimes, layout.
- Staged payments rather than one large sum.
- Few major works to plan in the first years of ownership.
The risks to manage
- Delays. Construction timelines slip. Check the contract for what happens if the delivery date is missed.
- Changes to the product. Read the technical description and the plans closely, and compare them at delivery.
- The overlap budget. Paying rent and loan interest at the same time for a year or more.
- The developer. Look at projects they have delivered, visit one, and ask residents what the experience was like.
Our take
VEFA is how Luxembourg builds most of its new homes, and the legal framework protects buyers well, provided they read what they sign. The completion guarantee, the 2% reservation cap and the notarial contract are real protections. The risks are practical rather than legal: time, budget and the gap between the brochure and the building.
Our guide to the buying process sets out the full sequence, and our properties for sale include both existing homes and new projects when we have them.
Sources
This article describes general rules and market practice in Luxembourg and is not legal, tax or financial advice. Rules and announced measures change; confirm the position that applies to you with a notary, your bank or a tax adviser before signing.
