2023-12-03 09:02:00
Loi Robien, Scellier law, Malraux system, Borloo law, Demessine law, Girardin law, Pinel law… The beginning of the 2000s was a crazy decade in terms of rental tax exemption. The principle was always the same. The public authorities granted an attractive tax rebate to individuals with the aim of directing their savings towards virtuous investments: building housing where the rental supply is insufficient, developing tourist residences in the countryside, helping the economic take-off of local communities. ‘overseas…
Sometimes, success was achieved, to general satisfaction. Too often, unfortunately, the trap has closed on households who had not asked for anything. Like millions of French people, they were approached by telephone. Like hundreds of thousands, they followed through. And like tens of thousands, they lost a lot of money buying, without even visiting, mediocre apartments in unlikely locations.
In the worst cases (Fixaniome, Lapujade, etc.), the developers went bankrupt under fraudulent conditions, leaving behind wasteland and debts. President of the urban community of Dunkirk (North), who became Minister of Housing in July 2023, Patrice Vergriete is perhaps the man who knows this subject best. He dedicated to him a thesis in 2013while he already had a busy career behind him as a local elected official and expert, at the Flanders-Dunkirk urban planning agency.
He emphasizes, for Point, another aspect of rental tax exemption, no less harmful than the scandals it has caused. Acting like a drug, it has made the construction sector terribly dependent on tax incentives. Weaning will not be easy, warns the minister, but it is essential. The Pinel system will expire on December 31, 2024. If it only depends on Patrice Vergriete, it will certainly not be replaced identically. Interview.
Point : Why has real estate tax exemption caused so many failures and scandals?
Patrice Vergriete : In housing, the traditional marketing method is the prefabricated modular sales bubble placed near the site by the developer. It represents 5% of the cost of a program. Within the framework of the Besson (1990) and especially Robien (2003) and Scellier (2008) laws, we will see the emergence of a new real estate sector, with its developers, often from Toulouse, its sales networks, its tailor-made programs.
It generated its own clientele, brought by wealth management advisors, then banks, who saw the opportunity. Together, they massively approached individuals who had not previously thought about investing in rental property or tax exemption. They offered them not an apartment, but a financial product. The idea was not to even look at the accommodation we were buying. It was only a placement support. “Your tax exemption advisor takes care of everything”, that’s their argument… The impact has been incredible. We added an entire floor to the real estate sector!
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With tax exemption, marketing costs increase. We go from 5% to 15%. This is considerable. Impossible to pass it on to the sale price. So, we’re getting back on land. We will look for affordable land, in the second ring of Montauban or in Bailleul, in the North, 10,000 inhabitants… Apart from land, there remains one lever: the construction itself. Developers saved money on materials. They have standardized as much as possible. They built the same residence everywhere.
Additionally, these were programs with 100% tenants, by definition. However, when there is no owner-occupier, residences deteriorate more quickly. It was construction designed for photography, since clients made their decisions from the catalog, without going to see it on site! One of these developers was still planning a swimming pool. It’s photogenic… And that’s where the scandals happened. Poor workmanship, bad locations, untraceable tenants… In reality, without the tax deduction, these rental investment homes were not worth much. And the benefit of the tax exemption was captured by the sales networks!
READ ALSO In Montpellier, the real estate market is slowing downScandals did not occur everywhere. Why were some municipalities affected more than others?
Big cities know how to reframe developers. They have extensive services, agents who are experts. In smaller municipalities, town planning is often carried out by a single person. We can console ourselves by saying that after disastrous years, most of the time, the empty residences ended up being filled. The fact remains that we have consumed hectares for often mediocre programs.
Why did the State not react? When the Scellier law was passed, in 2008, we were already talking about the slippages of Robien.
The state reacted. He refocused, he clarified the zoning so that tax exemption was not possible in areas without rental demand. But very quickly, difficulties appeared. Developers no longer came at all to municipalities classified B2, without tax exemption. I experienced it on the ground. Dunkirk was in B2 when Valenciennes was in zone A, open to tax exemption. No more programs were released with us. We must realize that during certain periods, at the height of the wave, tax exemption represented 80% to 90% of construction! The whole market was distorted, it was a totally abnormal situation. We can still see the consequences today, on the price of land.
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After the end of the Scellier system (2012), the problems were more or less resolved. There were no scandals with Pinel (2013). The problem is that the inflationary effect has persisted. Competition between networks has driven up land prices. There are other reasons for the increase, of course, but the tax exemption has weighed heavily.
Real estate has lost purchasing power and remains at a very high level. Add to that the rise in rates, which basically costs a household 50,000 euros: it is untenable. There is no short-term remedy, because sellers do not immediately understand that the decline is inevitable. At first, sales dry up. This is where we are today.
Specifically, given the current level of interest rates, is this the right time to end tax exemption?
We do not have the choice. To continue is to prolong the dependence. Worse, we are making it worse, because tax exemption would have to be increased another notch to make buyers more solvent, in the current context, when land prices must fall. Real estate is booming. He must stop the tax drug.
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Yes, and we cannot afford to go two years without housing production. There are obvious needs in tense areas. We are in a transitional period. We must support and encourage access to property without inflationary effects. We also need to bring back institutional investors into rental housing, as well as semi-professional property managers, who manage some housing on their own. Currently, they are focusing on the former. New is not attractive enough. He must become one again. The Livret A is at 3%, the investment in rental, which still involves a risk, must show higher profitability.
READ ALSO Real estate: building more ecologically, the new challengeDo you think it makes sense to talk about a national real estate market?
Of course not. The national market does not exist. There are a multitude of local markets with very contrasting dynamics.
How can we design a housing policy in this case?
By decentralizing. We are working on it. Zero interest loan zoning is a step in this direction [il n’est pas régi par les mêmes règles pour le neuf et l’ancien selon que la zone est considérée ou non comme un marché tendu, NDLR]. It’s still rudimentary. We must go further. It seems obvious to me that communities are best placed to regulate the rental of furnished tourist accommodation.
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