The French government introduced measures to revitalize the market

The Ministry of housing, equal territories and agricultural lands of France proposed a plan to stimulate the housing market. The plan includes a number of measures including increasing housing supply, differentiation of the lease terms for investors and to create favourable conditions for buyers with low incomes.

The increase in the number of sites under construction

The Ministry of housing set a goal to allocate more land plots available for construction, especially in areas where there is lack of housing. This will allow you to lower the price of land in General and to make the property more accessible. For this, it is proposed to appoint a tax credit of 30 % for income tax and social security payments for tax on capital gains when selling land for construction until December 31, 2015. In addition, a tax credit in the amount of 100 thousand euros in the donation plots until the end of 2015 (assuming that the land will eventually be built).

Increasing the supply of affordable housing

To boost Fund for affordable housing, the Ministry offers to create more attractive conditions for investors who invest in rental property. In France, many of the purchases of the primary objects, among which the most famous are governed by the laws Duflot and Sancy-of Bouvard. If the investor buys apartment in the primary market and agrees to lease it for a certain period, he can deduct up to 18% of its cost from the income tax during this period. Before the period was 9 years, but from September 1, 2014 investors are given the opportunity to participate in rental programs with different terms — 6, 9 or 12 years. Also from September 1, 2014 are tax benefits to those who invest in rental housing through a civil company for real estate investments (société civile de placement immobilier, SCPI). In addition, now investors are allowed to rent housing to rent family. Under the old requirements, housing purchased under the program Duflot, could not be handed over to a family member of the investor.

The proposal is expected to increase due to the construction. To do this, in the next five years is necessary to build 30 thousand housing units with reasonable rents in “tension zones” (zones tendues). These zones are areas where there is a preponderance of demand over supply. In France there is a shortage of housing. After the crisis the volume of construction is decreasing: according to Capital, in 2013 was launched the project on 331 900 housing units, which is 4.2 % lower than a year earlier. Moreover, from 1 January 2015 increasing the penalties for cities that do not plan to build social housing.

Incentives for purchasers primary residence

In France, not only the low mortgage rates (around 3 %), but there is a program with zero interest rates (prêt à taux zéro, PTZ). To facilitate the purchase of new homes and further strengthen support to families who buy homes for the first time, it was proposed to increase the period during which payments are delayed for loans with zero interest. From 1 October it is planned to extend the program PTZ in areas where many families with average incomes.

It plans to reduce VAT when purchasing a new property up to 5.5 % for families with modest incomes who buy homes in emerging neighborhoods. Housing for wealthy Frenchmen called HLM (habitation à loyer modéré). It is a multi-family house with low rent.

Incentives are created not only for buyers but also for those who transfers the property to the heirs. Thus, it is proposed the tax credit in the amount of 100 thousand euros for those who give a new home inherited children and grandchildren until 2016.

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In addition to these measures, the Ministry of housing plans to help households to implement works to improve energy efficiency of housing, so they can cut costs on utilities. It is proposed to provide funding for 50 thousand projects for families with modest incomes. In the future will be also simplified the formalities associated with the building regulations and the law ALUR (Loi pour l’accès au logement et un urbanisme rénové) — “the Law of affordable housing and renovated urban planning”.

The national Association of French estate agents (FNAIM) also made suggestions. One of them concerns the reduction of the fee for the registration of the transfer of ownership (frais de mutation). It is believed that the cost of buying property in France — among the highest in Europe: in addition to the above duties (7-7,7 % for new housing, 2-4% for the old), the buyer pays a Commission to the realtor or notary (approximately 5 %). In addition, when you buy buildings instead of duty paid VAT at the rate of 20 % (included in the price). It is not specified how to actually lower costs in the near future. But in any case, buyers of French property can hope to improve the situation.

Yulia Kozhevnikova, Tranio.Ru

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