Home ownership and rental market current challenges in France

Rising deposit requirements, higher lending rates, fewer new-build developments, rising costs of materials and inflation: current conditions are not conducive to home ownership. As a result, potential future homeowners are more inclined to remain tenants than to buy their first property. Find out more about the current issues surrounding home ownership in this article.

Why is there a housing crisis?

Over the past year, the crisis in the property sector has intensified significantly. For example, there has been a decline in new construction, illustrated by a considerable reduction in the number of building permits issued in recent months. Between 30,000 and 35,000 permits have been granted, compared with an average of 40,000 before the Covid epidemic. This is partly due to the 15% average increase in materials prices in 2022, a direct consequence of the conflict in Ukraine.

The rental market has also reached a dead end. It is estimated that 2.42 million people are waiting for social housing in France, a record figure. More generally, property prices have continued to rise. According to notary and INSEE indices, they have increased by a factor of 2.5 to 3 since the early 2000s.

More and more French people, particularly families and retired people on modest incomes, are being forced to remain tenants, as they are unable to buy their own home. In the first half of the year, rental applications rose by more than 50%, while transaction applications fell by 7%

Unfortunately, this trend is not surprising given the current economic climate, and the lack of concrete and immediate government measures to facilitate home ownership is making itself felt. More and more first-time buyers and low-income households are finding themselves forced to opt for rental accommodation. This situation is exacerbated by persistently high property prices, a slowdown in the construction of new homes and general complications in becoming a homeowner.

Why is it difficult to find rented accommodation for the autumn?

People looking to rent property are currently experiencing great difficulties, particularly students looking for accommodation before the start of the new academic year in September. In March 2023, the Clameur observatory revealed that one- and two-bedroom flats are only staying for an average of 15 days on advertising sites, and many properties are let even more quickly.

The French rental stock is not being renewed, and there are 17% fewer rentals compared with the previous year (2022). At the same time, demand has risen by 12%, making the market even tighter than before.

Young aspiring first-time buyers, who would normally buy their first property and release their flat for the rental market, are staying renters because interest rates have risen from 1% to 3.72% for a 20-year loan. This is also affecting students, who find themselves competing with these first-time buyers for the same types of accommodation. The current situation is therefore having a significant impact on the student rental market

The entry into force of new regulations under the Climate and Resilience Act in January 2023 has further complicated the situation. Homes with low energy performance ratings (DPE) can no longer be rented out/ DPE G and F ratings will be banned in 2025 and 2028 respectively. As a result, some landlords are unable or unwilling to renovate their properties, and have decided to put them up for sale. The search for accommodation is becoming even more difficult for students.

What are the best ways to buy a property?

The zero-rate loan (PTZ)

The zero-rate loan (PTZ) is a form of assistance for first-time buyers, enabling them to obtain an interest-free, no-cost mortgage. It can be obtained for the purchase of a home intended as a principal residence or under the social rental scheme.

The amount of the loan granted to encourage home ownership depends on a number of factors, such as :

the geographical location of the property project
household income and composition
the number of people in the household
the type of property project.

The PTZ purchase must be for a new property or an existing property requiring renovation. In this case, the renovation work must represent at least 25% of the total net selling price. Eligible work includes renovating, modernising, creating or converting living space, as well as renovation work not covered by the ECO PTZ.

The zero-rate eco-loan (PTZ)

The zero-rate eco-loan (eco PTZ) is a financial aid scheme designed for people wishing to purchase a primary residence that has already been built, and applies specifically to homes completed more than 2 years ago.

To qualify, you must meet one of the following requirements:

undertake renovation work on the property;
carry out insulation work on low floors;
replace an individual sanitation system with one that does not consume energy;
achieve a certain level of "overall energy performance" for the home.

This loan is not means-tested.

Departmental and regional loans

Another home ownership scheme is the departmental and regional loans, known as 'social' loans. These are available if your departmental or regional council has set up a fund for its residents. These loans are specifically reserved for low-income families.

Employer loans

Also known as the "1% housing loan", the employer loan is a financing option offered by many companies to their employees. Its aim is to help employees buy their principal residence by offering them a favourable rate for their home loan. Contact your employer directly for more information

Good to know: A couple can combine two 1% housing loans, as long as they do not exceed a specified ceiling.

Social Access Loan (PAS)

The Prêt à l'Accession Sociale (PAS) is designed for households on low incomes. As part of the process of becoming a homeowner, it allows you to purchase a principal residence while retaining your entitlement to the APL (Aide Personnalisée au Logement).

The Compte Épargne Logement (CEL) loan

The Compte Épargne Logement (CEL) allows you to obtain a mortgage at a favourable rate after a minimum savings period of 18 months. The loan amount is capped at €23,000, and the accumulated interest must be at least €75 to qualify

Prêt Social Location Accession (PSLA)

Homes eligible for the PSLA (Prêt Social Location-Accession) loan are intended for residents who meet specific income criteria. This loan is granted to operators who build "social" housing, and enables households wishing to buy a new home to benefit from a number of advantages, such as:

exemption from property tax for 15 years ;
a reduced VAT rate of 5.5
no interest on the loan;
reduced notary fees;
the possibility of combining this loan with other financial assistance.

Home ownership : what you need to know

Home ownership is currently a real challenge, with rising interest rates, a shortage of housing and a drop in the number of new property developments. As a result, first-time buyers are opting to remain tenants, which is adding to the pressure on the rental market. Fortunately, there are a number of subsidised loans available to encourage home ownership and ease the pressure on the market. The government will also be introducing a series of measures to encourage young working people to buy rather than rent.

Who is eligible for social home ownership?

It is estimated that 64% of French households are eligible for social home ownership. These may be single people or couples.

What loans are available to help people buy their own home?

Depending on your family, social and professional situation, you may be eligible for loans to help you buy your own home: