The second article in the EFL ‘Europe series’ in the German magazine DW Die Wohnungswirtschaft has been published in the January 2019 edition. Written by Bertrand Bret, advisor of the President of the Paris based housing association Paris Habitat. He describes the major effects and challenges after the recent changes in the political and financial framework for social housing providers in France. With almost 5 million social homes, 17% of the housing stock, the sector has a reasonable size with about 17 billion public investments per year for new construction (goal 130.000 p/Y) and renovations. He describes 5 major changes for the sector:

1. Introduction of solidair rent reduction (Réduction de Loyer de Solidarité: reduction individual rent subsidies for tenants, paid by housing companies through rent reduction for tenants.
2. Increase rate of value added tax from 5,5% to 10%
3. Freezing of rents
4. Higher costs for social housing companies to compensate the withdrawal of governmental funding.
5. Higher costs for borrowing under the Livret A system. Interest rates more close to market rates.

Furthermore the French government forces the housing corporations to merge to a minimum size of 12.000 homes per organisation and the sale of social homes.

The effects described by Bret include a strong reduction of the financial capacities of French social housing providers, less investment opportunities, less new construction (less than 100.00 per year and further reduce) and more sales (from 8.000 per year now to 40.000 per year in near future). The whole (German) article can be downloaded here.