France to cut red tape, extend easy loans to fight housing crisis
25/06/2014 16:36
* Govt to revive interest-free loan scheme for first-time
buyers
* Fifty construction regulations to be eased
* Construction slump weighing on GDP growth
By Leigh Thomas
PARIS, June 25 (Reuters) - The French government promised on
Wednesday to slash red tape holding back housing investment and
to ease conditions for interest-free loans to halt a home
building slump that is choking growth in the euro zone's
second-biggest economy.
Despite a chronic housing shortage, new home construction
has fallen to lows not seen in more than 15 years, with
bureaucracy putting off developers and high prices discouraging
would-be buyers. ID:nL6N0O651T
Prime Minister Manuel Valls said the government planned 50
measures to simplify building regulations, offer tax breaks for
landlords who accept rent limits and ease 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 need to act, and act quickly."
The top priority is to continue offering interest-free loan
plans for first-time buyers with low incomes, which are
currently due to be halted at the end of the year.
The government aims to increase the number of buyers with
access to such loans, which are provided by banks in parallel to
traditional mortgages, from 45,000 currently to 70,000-80,000.
Access would be widened by increasing the eligible income
limit for borrowers. Terms would be extended starting as soon as
October for some loans, Housing Minister Sylvie Pinel told
journalists.
Requirements for new apartment buildings to have bike
storage and parking spaces will also be eased. Property
developers say such amenities push up the prices of apartments,
making them unaffordable for many buyers.
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Housing investment graphic: http://link.reuters.com/jah69v
House price graphic: http://link.reuters.com/tyx36t
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HOUSING CRISIS
Pinel said the Socialist government would also pursue plans
for rent limits in particularly tight local markets under a new
law that some say may deter investors from putting money into
housing.
The French property developers federation welcomed plans to
extend tax breaks for landlords who cap rent rises, its
president Francois Payelle said, describing the package as
broadly a step in the right direction.
"There are some concrete things here," he told Reuters. But
he said more needed be done to free up potential building plots
in the private sector in addition to government plans to sell
off more public land.
Analysts at Societe Generale said the new measures could
affect business for property developers like Kaufman & Broad
KOF.PA , Maisons France Confort MFCP.PA and Nexity NEXI.PA .
The home construction slump has become a major headache not
only for a growing number of inadequately housed voters but also
for President Francois Hollande, haunted by a campaign promise
to build 500,000 new homes per year.
The situation has only worsened since he came to office in
May 2012. Housing starts fell in May to the lowest level since
1998 while confidence in the construction sector has reached
lows not seen since 1997, according to official figures.
The slump is increasingly becoming a drag on France's
overall economic activity and could prevent growth from
attaining the government's target of 1.0 percent this year.
Weighing on overall growth, household investment is set to
slump 6.7 percent this year, the sharpest drop since the dark
days of the global financial crisis in 2009, the statistics
agency INSEE forecast on Tuesday. ID:nL6N0P52BL
(Editing by Hugh Lawson)
((leigh.thomas@thomsonreuters.com)(+33 1 4949 5143)(Reuters
Messaging: leigh.thomas.thomsonreuters.com@reuters.net))
Keywords: FRANCE HOUSING