France to cut red tape and extend easy loans to tackle housing crisis
PARIS: The French government yesterday promised to cut red tape that is holding back housing investment and ease the terms of interest-free loans to halt the housing construction slump that is stifling the growth of second largest economy in the euro zone.
Despite a chronic housing shortage, construction of new homes has fallen to levels not seen in more than 15 years, with bureaucracy discouraging developers and high prices discouraging potential buyers. Prime Minister Manuel Valls said the government is planning 50 measures to simplify building regulations, offer tax breaks to landlords who accept rent caps and ease the conditions for obtaining zero-interest loans. “The market is depressed. There were 330,000 housing starts in 2013 when 500,000 were needed,” Valls told Le Parisien newspaper. “We must act, and act quickly.”
The top priority is to continue offering interest-free loan plans for low-income first-time buyers, which are currently due to be discontinued at the end of the year.
The government aims to increase the number of buyers with access to these loans, which are provided by banks alongside traditional mortgages, from the current 45,000 to 70,000-80,000.
Access would be expanded by increasing the eligible income ceiling for borrowers. Terms would be extended from October for some loans, Housing Minister Sylvie Pinel told reporters.
Requirements for new apartment buildings to have bicycle storage and parking spaces will also be relaxed. Property developers say such amenities drive up apartment prices, making them unaffordable for many buyers.
Pinel said the socialist government would also pursue plans to limit rents in particularly tight local markets under a new law that some say could deter investors from investing in housing.
France’s federation of property developers has welcomed plans to extend tax relief for landlords that cap rent increases, its chairman Francois Payelle said, describing the package as a step in the right direction. “There are concrete things here,” he said. But he said more needed to be done to free up potential building land in the private sector, on top of government plans to sell more public land.
Societe Generale analysts said the new measures could affect the business of property developers like Kaufman & Broad, Maisons France Confort and Nexity.
The housing construction crisis has become a major headache not only for a growing number of poorly housed voters, but also for President Francois Hollande, haunted by a campaign promise to build 500,000 new homes a year. Reuters