1. Millions of homes at risk of damage during droughts
Around 10 million homes in France are at risk of damage from clay shrinkage (retrait-gonflement des argiles or RGA) during droughts in France, according to a report from data intelligence company NamR.
In particular, detached houses are more vulnerable, and in some communes, every single building of this type is classed as ‘at very high risk’ of RGA.
In Île-de-France alone, there are six communes where every single detached home is at risk of RGA:
- Montfermeil (7,868 detached homes)
- Le Raincy (3,041)
- Clichy-sous-Bois (2,583)
- Ormesson-sur-Marne (4,998)
- La Verrière (825)
- Le Pré-Saint-Gervais (338)
Alongside these six communes in Île-de-France, there are 11 others – all in the south of France – in which all detached houses in the commune have a much higher risk of RGA.
- Auch, Gers (8,760)
- L’union, Haute-Garonne (5,117)
- Balma, Haute-Garonne (4,704)
- Fuveau, Bouches-du-Rhône (4,655)
- Fleurance, Gers (4,251)
- Saint-Jean, Haute-Garonne (4,133)
- Gignac-La-Nerthe, Bouches-du-Rhône (4,100)
- L’Isle-Jourdain, Gers (3,949)
- Castelginest, Haute-Garonne (3,540)
- Saint-Victoret, Bouches-du-Rhône (2,753)
- Quint-Fonsegrives, Haute-Garonne (1,982)
Alongside these communes, millions of other homes in France could be affected by the phenomenon, particularly in the south (Occitanie, PACA, Nouvelle-Aquitaine), and in the Ile-de-France region.
In the Gers department, 87% of all detached houses could be affected by RGA, and 60% in Bouches-du-Rhône.
Last year saw €2.5 billion in compensation paid out to homeowners who were victims of RGA, and by 2050 that figure could double, reported BFMTV back in March.
New rules implemented by the government are set to increase the compensation levels for homes damaged by the phenomenon, as well as increase the parameters for those liable for compensation.
There are calls for prevention measures to be implemented in homes, which experts say will be cheaper to implement than compensation payouts.
In April, MPs in France backed the move to increase compensation.
2. House seller unusually compensated for notaire’s measurement error
A notaire’s mistake in recording the surface area of a house – which under certain circumstances sees the buyer compensated – saw the seller of the house also receive compensation.
If there is a discrepancy of more than 5% between the m² of the property listed and the actual m² of the building recorded after a sale, the buyer of the property must be compensated.
The law states they must be refunded the size difference between the two measurements as a percentage of the property price: for example, if the property is 10% smaller than listed, the buyer will receive 10% of the price they paid for the property in compensation.
A recent case however saw the seller refunded almost the entire amount they had to pay out for this compensation by a notaire.
In certain cases, “the seller can claim against the notaire, who was at fault for receiving the sale with an incorrect measurement,” said property lawyer Gabriel Neu-Janicki.
The seller can claim “loss of opportunity to sell the property at the same price for a smaller surface area,” he added.
The case the lawyer highlights – a 2018 sale of three lots to create one property in Nantes – saw the listing cite a 140m² surface area, but post-sale measurements only showed 125m² ( measured using Loi Carrez standards).
In the case in question, the notaire’s fault lay in not checking previous documents and co-ownership notes for the properties, which gave the correct figures.
The court’s ruling was that the notaire had to pay 80% of the compensation due to the victim to the seller, leaving them to pay the remaining 20% (in this case, around €10,000 of the €53,000 granted).
3. Mortgage interest rates can now go above 5%
The Banque de France’s July update to the usury rate – the maximum interest rate at which banks can lend money – has seen it rise to 5.09%, specifically for fixed-rate mortgages of 20 years or more.
The rate, which will be updated on the first of every month between now and 2024, increased by 0.41% last month alone.
“This increase is unexpected and proves that lending rates have risen sharply in recent weeks," said Julie Bachet, managing director of mortgage broker Vousfinancer.
The rate is calculated by assessing rates charged by banks for loans over the previous quarter, and then increasing this by one-third.
Alongside the interest rate for the mortgage itself, the usury rate is the maximum amount for all costs related to purchasing a new home, including borrower’s insurance and broker’s commission.
Alongside changes to the maximum usury rate, the average interest rate on a mortgage has increased fourfold in only 18 months – 1.12% in January 2022, compared to 4% today – and is yet another contributing factor to France’s housing crisis.
Even with house prices beginning to fall in some parts of France, higher mortgage rates are turning away potential buyers - especially first-time buyers - from the property market, and the number of people applying for mortgages in France is plummeting.
Despite this, the Banque de France says this is a “normalisation” and a return to market norms after “exuberant years of very low interest rates.”
“The share of home loans in total bank lending has risen from 60% in the early 90s to 83% today,” said French economist Agnès Bénassy-Quéré.
4. Couple forced to pay €45,000 to demolish new home
A couple had to pay €45,000 out of their own pocket to demolish their home less than two months after purchasing it, over fears it would collapse and damage nearby properties.
Despite using both an estate agent when purchasing the property and hiring an architect to help with renovations, after only two months the house began to collapse and was forced by the council to be demolished.
“When we visited the house, we noticed siding on the front. We asked what it was,” said Constance, one of the buyers.
“The estate agent told us it was seepage, but nothing serious, although we realised later when we removed the panelling that it was a hole in the facade,” she added.
Constance and her husband bought the 200m² property close to Lille for just over €200,000 last year, but knew additional work needed to be done, as it was in an almost-uninhabitable state.
They hired an architect to help them with the renovations, despite Constance’s husband Benjamin working in the construction sector.
“Just as they [the architect’s team] were removing the plasterboard, a section of the rear façade collapsed. An hour before, we were inside the house with our son,” said Constance.
The town hall ordered an analysis of the property – fearing it would collapse further and damage a neighbour’s house – before ordering that it must be demolished.
The total demolition costs – around €45,000 – had to be paid by them, although they are in the process of taking both the estate agent and architect - as well as the sellers and even the demolition company themselves - to court over the matter.
On top of this, they are still paying a mortgage for the property that no longer exists.
They are planning to rebuild a property on the lot themselves, and have opened an online fundraiser for money and equipment.
5. Sharp fall in new building permits signals a slowdown in French property market
Almost 20% fewer building permits were issued across France last year, according to the latest figures from the French building federation, Fédération française du bâtiment (FFB).
The number of building permits issued is a general indicator of the future of the housing market – the fewer licences granted, the fewer properties built and sold.
The period of June 2022 – May 2023 saw 18.1% fewer permits issued than June 2021 – May 2022.
The FFB has given a number of reasons for the fall.
Chief amongst them is the reduced demand for new housing, driven by the rise in the cost of building materials, still high as a result of the knock-on effects of the energy crisis and war in Ukraine.
On top of this, increased mortgage interest rates are causing fewer people to buy property in general, including new-build homes.
It says a lack of available land in desirable areas to build new properties is also driving the decline.
“The violent decline in new housing is accelerating,” said FFB president Olivier Salleron.
One potential danger of the slump is the effect on employment in the industry.
Mr Salleron added: “This crisis could potentially lead to the destruction of 135,000 jobs.”
While all of France has seen a decrease in permits issued, the effects are more pronounced in certain regions.
Whilst Île-de-France has only seen a reduction of 8.1% in permits, the Champagne-Ardenne area (permits are measured using the old regions of France) saw a 36.8% drop in permits on average.