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Intermediate housing: institutional investors called on to mobilize more

While one of the primary sources of financing for middle housing, the “Pinel” device, will gradually disappear by 2024, a report submitted to Parliament calls for increased mobilization of institutional investors.

Intended for the middle classes in large cities, the need for intermediate housing, these apartments with capped rents, is “between 180,000 and 420,000 new units over a decade,” said a report commissioned by the government and revealed Monday, June 14. That is to say, “an investment in equity of the order of 20 to 45 billion euros over the period”.

The question of financing arises, while one of the primary sources of funding for this type of housing, the “Pinel” device, will gradually disappear by 2024. It is intended for future owners who intend to rent their property: they are entitled to purchase aid if they charge below-market rent.

The General Inspectorate of Finance report, which reports to Bercy, and the General Counsel for the Environment and Sustainable Development, which reports to the Ministry of Ecological Transition, submitted to Parliament, calls for more significant mobilization of institutional investors like banks or insurers.

While institutional investors were only spending 6.3% of their assets on real estate at the end of 2019 and only 1% on residential housing, the report’s authors are encouraging them to change their portfolio composition. To do this, these actors do not necessarily expect “massive state intervention”, but the establishment of a “legal, economic and fiscal environment that is both stable and predictable,” says the report.

Tax credit
In addition, to “facilitate the fluidity of the market”, the “priority” is to remove the municipalities’ reluctance in the face of this type of housing which does not bring in any tax revenue since it is exempt from property tax. Therefore, the report proposes to replace this exemption with “a tax credit”.

Another gesture aimed at municipalities: “put an end to the criterion consisting in imposing at least 25% of social housing within intermediate housing programs to benefit from the reduced rate of VAT set at 10%”, a derogation that would apply in municipalities respecting the quotas set by the SRU law.

Another avenue for attracting capital from institutional investors calls for extending the tax advantages they enjoy to the renovation of housing in the construction of new intermediate housing.

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