Every French property transaction is settled in euros. That is the law, regardless of where the buyer holds their funds. For a UK buyer with savings in pounds sterling — or a US or international buyer whose assets are in dollars — the property price is effectively two numbers: the euro asking price, and the sterling or dollar equivalent on the day you convert. The second number is the one that can change without warning, and without your involvement.
A forward contract is the tool that fixes it. This guide explains how it works, when it makes sense, and why the structure of a French purchase — whether resale or off-plan VEFA new-build — shapes exactly how and when you should use one.
What a Forward Contract Is — and What It Isn't
A forward contract is a legally binding agreement between you and a currency provider to exchange a set amount of one currency into euros at a rate agreed today, with settlement at a specified future date — typically available up to 12 months ahead. You are not predicting where the market will move. You are removing the market's movement from the equation for a known future payment.
The mechanics are straightforward: you agree the rate, pay a deposit (usually around 10% of the total contract value) to secure it, and settle the balance when the payment falls due. If sterling weakens before that date, you are protected. If sterling strengthens, you have locked yourself out of that upside — a trade most property buyers accept readily in exchange for a budget they can plan around.
A forward contract does not predict where the rate is going. It removes the rate question from a specific, known future payment — turning an unknown cost into a fixed line item.
This is categorically different from a spot transfer, where you exchange at the rate available at that moment. Spot transfers are the right tool when the euros are needed immediately — the reservation deposit paid the day you sign the contract, for instance. A forward contract is relevant when you know a large euro payment is coming but it is weeks or months away, and you want to plan around a number rather than a risk.
For a broader look at how exchange-rate exposure affects the overall cost of a French Alps purchase, the guide to currency risk for UK and international buyers covers the full picture. This post focuses specifically on the forward contract mechanism and how to apply it to different purchase structures.
Why French Property Makes This Particularly Relevant
French property purchase timelines are long by design. Between a signed offre d'achat and notaire completion on a resale property, two to four months is typical. On an off-plan VEFA new-build, the gap between reservation and final handover commonly runs to 18–24 months, with multiple stage payments falling due along the way.
Throughout that period, your euros are priced against the currency you hold. The European Central Bank's reference rates show that GBP/EUR can move 5% or more over a six-month period — not exceptional volatility, just normal market behaviour. On a €600,000 purchase, a 1% adverse rate move represents around £5,200 in additional sterling cost on the same property at the same price. A 3% move is around £16,000. The euros do not change; the bill in your currency does.
Before going further, run your purchase price through the Domosno rate tracker. It shows you the sterling or dollar equivalent of your specific purchase price at the current reference rate, and what a 1% or 2% adverse move would cost in absolute terms — in seconds, without speaking to anyone. That number is your starting point for deciding whether and how to hedge.
Resale Property: One Decision, One Large Transfer
A French resale purchase typically involves two currency transfers: a deposit — usually 10% of the purchase price — paid to the notaire's escrow account when the compromis de vente is signed, and the remaining balance at completion (acte de vente), two to three months later. Notaire fees are additionally due at or just before completion.
For the deposit, a spot transfer is usually the only practical option — the money is needed within days and the amount is clear. But the completion balance is a different matter entirely. You know the exact euro figure. You know roughly when it is due. That pairing — known amount, known date — is precisely the scenario a forward contract is designed for.
Consider a €600,000 resale where you sign the compromis with GBP/EUR at 1.15. The €540,000 completion balance costs approximately £469,500 at that rate. If the rate falls to 1.10 by completion — a move of less than 5%, and well within historical norms — the same balance now costs approximately £490,900: an additional £21,400 on an unchanged transaction. A forward contract booked at the compromis rate eliminates that variable entirely.
The cost of not acting is invisible until completion day. The cost of acting is the forward contract deposit, which is typically returned or applied at settlement. Most resale buyers who consider the maths find the decision straightforward.
Off-Plan VEFA New-Build: Multiple Payments, Multiple Windows
The VEFA (Vente en l'État Futur d'Achèvement) system — the legal framework for all off-plan new-build purchases in France — requires buyers to pay in tranches as construction progresses. The Construction and Housing Code sets maximum cumulative percentages at each stage. The standard schedule runs:
- 5% at reservation — typically a spot transfer; needed quickly when you sign the reservation contract
- 35% cumulative at foundations completion — approximately 6 months after reservation; the first large stage call
- 70% cumulative at watertight stage — roof complete, exterior walls done; usually 12–18 months in
- 95% cumulative on completion of works — interior finished, building signed off
- 100% at handover — final 5% released once snags are resolved
Each stage call arrives with a payment window — typically 15 to 30 days from the architect's certificate confirming the milestone. By the time the letter lands, the rate is whatever it is. On a €650,000 new-build, the four calls after reservation total €617,500. Left unhedged, every one of those transfers is fully exposed to wherever the GBP/EUR rate happens to be on that day.
The practical approach for VEFA buyers is not to hedge the entire purchase price at reservation — that would require deploying the full forward contract deposit across the whole sum immediately, which is both capital-inefficient and impractical since some stage dates are two years away. Instead, most buyers address the upcoming stage payments as each falls within the 12-month forward contract window: fix the foundations call when it comes into range, then address the watertight call, and so on.
On a €650,000 VEFA new-build, a 2% adverse GBP/EUR move on the outstanding balance after reservation adds approximately £11,500 to the total sterling cost — on an unchanged purchase price. Addressing even the largest single stage call with a forward contract removes the majority of near-term exposure.
The Domosno currency planning tool models the full VEFA payment schedule for your purchase price, showing each stage call in sterling or dollars at the current reference rate — and the impact of a 1–2% rate move on the amounts still outstanding. Use it before each stage call, not just at reservation.
For a detailed walkthrough of what happens at each VEFA construction milestone — and what the architect's attestation means in practice — see the guide to the French new-build handover process.
Spot, Forward or Target Rate: Picking the Right Tool
A forward contract is one of three main instruments available at different points in a French purchase:
- Spot transfer — exchange at today's market rate, funds move immediately. Right for deposits needed within days.
- Forward contract — fix a rate now for a payment up to 12 months ahead. Right for a known completion balance or upcoming VEFA stage call with a clear date.
- Target rate order — instruct the provider to trade automatically when the rate reaches a level you specify. Right when you have timing flexibility and a specific rate in mind, but no fixed payment deadline pressing you.
Most VEFA buyers end up using a combination across the build: spot for the reservation deposit, a forward contract as each stage call comes within the 12-month window, and occasionally a target rate order during quieter periods between stage calls. The right mix depends on the payment schedule, risk appetite and how the build timeline is tracking. The rate tracker helps you see the live impact before each decision point.
What to Confirm in Writing Before Booking
Not all currency providers are built for property transfers, and the details matter when large sums and property deadlines are involved. Before committing to any forward contract, get the following confirmed in writing:
- The agreed rate — exact euros per pound or dollar, not an indicative range
- The deposit required — typically 10% of contract value, held by the provider until settlement
- The settlement date — confirmed in writing; check what flexibility exists if your notaire shifts the timeline
- Cancellation and roll terms — if the date needs to move, what are the costs and limits?
- All fees — rate margin, transfer fees and any margin call provisions are separate items
- A named contact — for a property transfer, you need a person to call when the notaire requests same-day confirmation of incoming funds
Currency brokers built specifically for property payments handle staged transfers, forward contracts and notaire documentation as routine. High-street banks and mass-market transfer apps are not designed for this workflow. Start with the rate tracker to quantify your exposure, then request a quote from a specialist before signing any contract.
The Timing Mistake Most Buyers Make
The most consistent error is treating the currency transfer as an afterthought — something to arrange in the days before completion or a VEFA stage deadline. At that point there is no time to compare providers, negotiate terms or explore forward options. You convert at whatever rate the market offers, often through your bank's standard international transfer service, and you absorb whatever that produces.
The correct sequence is to address the currency question at the same time as the mortgage question — before signing the compromis or reservation contract, when you know the purchase price, the payment schedule and the approximate timeline. That is when you have options, not when the notaire's office is waiting for the transfer reference.
If you are also arranging a French mortgage, the two planning exercises run in parallel: the mortgage covers part of the euro requirement, the currency transfer covers the rest. Use the Domosno mortgage calculator to establish what euro balance needs to be converted from foreign currency, then use the currency exchange planner to understand the rate exposure on that specific amount before you commit to a purchase price.
The Short Version
A forward contract is not a complex financial instrument. It is an agreement to exchange a fixed amount at a known rate on a specified date. For a French property buyer with funds in sterling or dollars, it converts the exchange rate — the largest uncontrolled variable in the purchase — into a fixed budget line.
For resale buyers, the window is the gap between compromis and completion. For VEFA buyers, it is the rolling 12-month period ahead of each stage call. In both cases, the work should be done before contracts are signed, not the week the deadline arrives.
Check the rate impact on your purchase price now, then speak to a specialist before the next contract milestone. The numbers take less than a minute to run.
