Banque de France has announced that a set of rules for banks granting property loans will become compulsory from January. Previously these rules were only advisory guidelines.
The regulator aims to dampen down the housing market, fearing it is overheating.
From January 1, 2022, banks must not grant mortgages of over 25 years, and should limit the amount most buyers are allowed to pay back under the loan to 35% of their net income.
Banks will now face severe penalties if they break the rules - but can deviate for 20% of the loans that they grant.
Nicolas Théry, the newly elected head of the French Banking Federation and president of Crédit Mutuel, said he did not think the move would affect the dynamics of the housing market, and also dismissed fears that the market was overheating.
‘Hobbit Houses’ find their market
The strong housing market, coupled with interest in very energy efficient homes, has led to a growth in the number of arch-shaped houses, which can be integrated into hillsides.
Some people compare them to the hobbit houses described by JRR Tolkien in 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 the French Air Force was demolishing.
Change to how vice-caché law interpreted
France’s courts were busy with an interpretation of how the vice-caché laws relating to property sales work.
A vice-caché is a defect that is not visible at the time of sale, but which affects the property to such an extent that it is uninhabitable, meaning that the owner would not have bought it – or at least bought it for the same price – if they had known.
In a case involving a corrugated concrete and asbestos roof, the courts have ruled that a buyer could argue that the roof, which they claimed they did not know contained asbestos, was a vice-caché, and so demand some money back from the seller.
The seller had argued that the roof was in plain sight and everybody would know that it was likely to contain asbestos.
One in two Parisians wants to move out of the city
The high cost of living in the French capital is pushing many of its residents to consider moving away.
Around 47% of Parisians think that the city is too expensive and 43% believe that they could find a better quality of life elsewhere.
This is according to a survey carried out this year by the University of Paris and King’s College London which asked 1,000 Paris residents about their future living plans.
The Covid pandemic has fuelled a desire for open, green space in people living all over France, thus accelerating a movement away from cities and towards more rural areas.
Anti-squat law has mixed success
September also saw the publication of a report into the effectiveness of new anti-squatting laws, which require prefectures to intervene within 48 hours of a complaint being made about squatters by property owners.
In some areas, complaints were dealt with quickly, but in others prefectures refused to do so, claiming the correct paperwork had not been provided, or arguing that the new law contradicted previous laws giving squatters housing rights.
There are now 3.6 million second homes in France
France now has more second homes than ever with 3.6 million being counted in 2020 according to a study published by Insee, France’s national office of statistics, in September.
Now, one in every ten French flats and houses are second homes, and since the 1980s, the number of this type of property has been growing two and a half times faster than the population.
DPE inspections hit by bugs
Problems with the new energy performance certificate (diagnostic de performance énergétique) surveys which started in July came to a head in September, with the Ministry for Ecological Transition recommending surveys be suspended on all houses built before 1975.
It follows complaints that the software developed to give ratings did not include materials commonly used in house building before 1975, and so was giving abnormally low ratings for some very well insulated houses.
The suspension, which might affect all house sales, except those judged “urgent”, will last at least till the start of October, when a meeting between surveyors and software coders is due to take place.
Surveyors say they will continue to give provisional ratings to help transactions progress, but that only definitive ratings will have legal force.
DPE surveys are now required for all houses being sold or rented, and restrictions on renting poor performing properties are progressively coming into force.
Gas heating still hit hard in DPE scores
An attempt in September by estate agents to lobby for better DPE scores for houses heated by gas – until very recently the form of heating favoured by the government -- fell on deaf ears.
The agents argued that low marks for gas heating were unfair, but the housing ministry said only poorly insulated properties with gas heating were being marked down.
French housing loans with ING could switch to other banks
September also brought news that Dutch bank ING, a pioneer of web-based banking, is looking to sell its French activities.
If successful, its portfolio of property loans, thought to make up a large part of its activities in France, will change hands.
A decision on whether to go ahead with the sale is likely to take place in mid-October, with French banks Société Général and Orange Bank rumoured to be interested, along with U.S. fund Cerberus, which recently bought HSBC’s retail bank operations in France.
A new classification from the government’s land agency SAFER shows that the property boom also extends to vineyards
The top 50 appellations where vineyards had gained in value in percentage terms were listed, with the Bordeaux appellations Pessac-Léognan top with a 253% increase in prices to €600,000 a hectare between 2010 and 2020.
Another Bordeaux appellation, Pauillac, was second with a 180% increase to €2,800,000 a hectare, followed by Cognac Bon Bois where prices rose by 167% to €40,000 a hectare.