News from the French real estate market: October review
The Banque de France has announced that a set of rules for banks granting mortgage loans will become mandatory from January. Previously, these rules were only advisory guidelines.
The regulator aims to curb the real estate market, fearing overheating.
As of January 1, 2022, banks are no longer required to grant mortgages older than 25 years and are expected to limit the amount most buyers are allowed to repay on the loan to 35% of their net income.
Banks will now face stiff penalties if they break the rules – but can deviate for 20% of the loans they make.
Nicolas Théry, the newly elected president of the French Banking Federation and chairman of Crédit Mutuel, said he did not believe the move would affect the dynamics of the real estate market, and also dismissed fears of the market overheating.
Read more: Banks will toughen the rules for getting a mortgage in France
“Hobbit houses” find their market
The dynamism of the housing market, together with the interest in very energy efficient houses, has led to an increase in the number of arch-shaped houses, which can be integrated into the hills.
Some people compare them to the hobbit houses described by JRR Tolkien in The Lord of the Rings.
Hautes-Pyrénées builder Benoît Darré has been building the houses since 2014, using 80% recycled materials, including panels from old hangars that the Air Force is in the process of demolishing.
Modification of the interpretation of the law on hidden defects
French courts were busy interpreting the operation of hidden vice laws relating to real estate sales.
A hidden defect is a defect which is not visible at the time of sale, but which affects the property to such an extent that it is uninhabitable, that is to say that the owner would not have bought it – or at least would have bought it for the same price – if they had known.
In a case involving a corrugated concrete and asbestos roof, the courts ruled that a buyer could argue that the roof, which he claimed not to know contained asbestos, was a hidden defect, and therefore require a refund from the seller.
The seller had argued that the roof was in plain view and that everyone knew it was likely to contain asbestos.
One in two Parisians want to leave the city
The high cost of living in the French capital is pushing many of its inhabitants to consider moving.
Around 47% of Parisians think the city is too expensive and 43% think they could find a better quality of life elsewhere.
This is indicated by a survey conducted this year by the University of Paris and King’s College London, which questioned 1,000 Parisians on their future life projects.
The Covid pandemic has fueled a desire for open green spaces among residents across France, thus accelerating a movement away from cities to more rural areas.
Anti-squat law has mixed success
September also saw the publication of a report on the effectiveness of the new anti-squatting laws, which oblige prefectures to intervene within 48 hours of a complaint against the squatters by landlords.
In some areas, complaints were dealt with swiftly, but in others, prefectures refused to do so, claiming that the appropriate documents had not been provided or arguing that the new law was in contradiction with previous laws granting housing rights squatters.
Read more: Why requests for the eviction of squatters in France are often refused
Read more: France’s new anti-squatter laws will be “difficult to implement”
There are now 3.6 million second homes in France
France now has more second homes than ever with 3.6 million in 2020 according to a study published by Insee, the national statistical office, in September.
Today, one in ten French apartments and houses are second homes, and since the 1980s, the number of this type of property has increased two and a half times faster than the population.
DPE inspections hit by bugs
Problems with the new energy performance diagnostic surveys that began in July came to a head in September, with the Ministry of Ecological Transition recommending the suspension of surveys of all homes built before 1975.
Complaints ensued that the software developed to give ratings did not include materials commonly used in the construction of houses before 1975, and therefore gave unusually low ratings for some very well insulated houses.
The suspension, which could affect all home sales except those deemed “urgent”, will last at least until early October, when a meeting between surveyors and software coders is due to take place.
Surveyors say they will continue to give provisional notes to help transactions move forward, but only final notes will have legal force.
DPE surveys are now mandatory for all homes sold or rented, and restrictions on the rental of underperforming properties are gradually coming into effect.
Read more: The misfortunes of Linky reported as the last meters installed throughout France
Gas heating still hits hard in DPE scores
A September attempt by realtors to push for better DPE scores for gas-heated homes – until very recently the government-favored heating method – fell on deaf ears.
Officers argued that the low ratings for gas heaters were unfair, but the Housing Department said only poorly insulated properties with gas heaters were being rated.
Read more: Three million households faced with an increase in their gas bill of up to 12.6% in France
French real estate loans with ING could switch to other banks
September also brought news that Dutch bank ING, a pioneer in online banking, is considering selling its French operations.
If successful, its mortgage portfolio, which is supposed to constitute a large part of its activities in France, will change hands.
The decision to proceed with the sale is expected in mid-October. French banks Societe Generale and Orange Bank would be interested, as well as the American fund Cerberus, which recently bought the retail banking activities of HSBC in France.
A new ranking from the government land agency SAFER shows that the real estate boom is also spreading to vineyards
The first 50 appellations where the vineyards have gained in percentage value have been listed, with the Bordeaux appellations Pessac-Léognan in the lead with a price increase of 253% to € 600,000 per hectare between 2010 and 2020.
Another Bordeaux appellation, Pauillac, comes in second with an increase of 180% to € 2,800,000 per hectare, followed by Cognac Bon Bois whose prices have increased by 167% to € 40,000 per hectare.
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