The Promises Macron Makes…

En Marche candidates

Ever since Emmanuel Macron was elected President of France, the feeling of hope has permeated the air and a weight of pessimism has been lifted. At least, that’s what I’ve been feeling from the attitudes of everyone around me and in the media. The real estate industry in France is buzzing with such hopeful news as Monsieur Macron has made a series of promises that should be encouraging for the industry and property market. The parliamentary elections on June 11 (first round) and 18 (final vote) will be telling as to whether he will be able to implement his promises or not.

As of now, the polls are pointing to a landslide approval vote for Macron’s party — En Marche candidates are ahead in 10 out of 11 constituencies. His “Make our planet great again” speech in response to Donald Trump’s decision to pull out of the Paris Climate Accord has been highly praised and adds to his popularity and that feeling of hope that seems to be washing over the French Republic.

I am particularly encouraged by several of his promises, particularly concerning rent control, shorter terms of leases to allow those who should have the right to housing for less than one year and encouragement of building new properties where housing is scarce.

Have a look at 10 of his promises that could really change the property landscape:

1) Reformation of the Allocation of Social Housing

Should he intend to maintain the SRU law (the 10-day cooling-off period within which the buyer has the power to retract the purchase), he promises “instead of opaque procedures and unrecognized rules,” to establish “a point system, simple and comprehensible, based on objective criteria (size of the family, their resource level, location of research) to allow everyone to know their chances of obtaining housing and the foreseeable waiting period.”

2) Extend the Pinel Act and PTZ Devices

In order not to break the dynamics of a sector in full recovery, thanks to the private investors who make it possible to build houses, the Pinel Act (which must end on December 31, 2017) should be renewed. The Pinel plan was intended to encourage investment in new housing construction by offering investors a tax reduction of up to €63,000 on their personal income tax. Even if it changes its name, the principle of a private rental investment scheme will be maintained, as will the PTZ (Prêt à taux zéro), a state regulated, interest-free loan which is intended to help first-time buyers.

3) Massively Renovate Certain Housing

He proposes a free audit to owners occupying precarious housing…in rural area, old homes, degraded condominiums and apartments. A public fund will take over the work for the most precarious properties. The Crédit d’Impôt Transition Energétique (CITE — or Energy Transition Tax Credit), will be converted into a perceptible cost at the time of construction and not the following year.

4) Building Where the Needs Are

Macron intends to end to the quantitative objective of 500,000 housing units per year, but rather to meet priority needs in particularly tense areas such as the Ile-de-France, the Aix-Marseille metropolis or the Toulouse urban region. The State may use “National Interest Operation” type devices, issuing building permits, expediting procedures, including limiting the possibility of recourse.

5) Create a Professional Real Estate Lease

As an incentive to put housing on the market and serve those who are excluded, the new president intends to create a lease for a period of three months to a year, for active professionals (CDD contracts, interim employees, placement and training, etc.) and subject to the same regulatory protections that a student lease has to access affordable housing. This lease without a security deposit will be deployed in particularly tense areas.

6) Evaluate the Framework of Rental Rates

He does not wish to extend the system of rent control outside of Paris and Lille and wants to evaluate the effectiveness of the system. He believes that lowering rents can be counterproductive as landlords who cannot achieve enough revenue may resort to removing their properties from the market.

7) Facilitating Access to Housing for Young People

Emmanuel Macron is committed to building 80,000 housing units for the young: 60,000 student housing units and 20,000 youth housing units. He wants to encourage developers to create another 30,000 such properties accessible without a security deposit or guarantee and with a non-renewable lease.

8) Reviving Urban Renewal

Boosting the urban renewal program by raising it to 10 billion euros in 450 priority neighborhoods is another one of his commitments. He also wants to build low-rent housing in neighborhoods outside of where he it’s now concentrated, propose relocations at the inter-municipal level and mobilize landlords of social housing.

9) Exempt 4 out of 5 of the Taxe d’Habitation

This is one of the main commitments of Macron: by 2020 to reduce or remove the residence tax for 80% of the French, a tax which he finds “unjust.” For example, a couple with two children will no longer have this tax burden to pay as long as their income is less than 5,000 euros per month. The threshold will be set at €20,000 per year per tax unit (€40,000 for a couple). In return for the loss of profits for the communities, he promises to pay in 10 billion euros per year.

Macron’s video

See his message on this video.

10) Replace the ISF (Wealth Tax) with a Property Tax (IFI, Impôt sur le Fortune Immobilière)

Based only real estate assets, this tax would be based on the same qualifying threshold  as the ISF (€1.3 million), the same scale and the same rules (30% reduction on the principal residence) that the current thresholds affecting nearly 343,000 French households. According to Macron: “No one will be subject to tax increases when the ISF is replaced by the IFI.” And he promises that there will be no taxation of the “imputed” or “fictitious” rents of the owner-occupants.

Now you can see why there is so much hope in the French air. My further hope is that all the young French who left France when their government was less encouraging, will return to France filled with all they learned living outside the country and inject a new energy and life into French society and the ailing economy.

Stay tuned for the results of the elections later this month!

A bientôt,

Adrian Leeds
The Adrian Leeds Group

(in Nice)

Respond to Adrian:

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