Breton town’s plan to offset second-homes with cheaper main homes

Our French property update also looks at an insurance warning, energy ratings and mortgages and the popularity of 10m² Paris apartment for rent at €610 a month

We look at stories for main and second-home owners, as well as tenants and first-time buyers
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1. Breton town offsets second homes with cheap building plots

A commune in Brittany is giving people a chance to get a foot on the property ladder by offering land below the market value – as long as they promise to live there for 10 years.

Plougasnou town council in Finistère is offering 21 plots for sale at a price of €95 per square metre, as well as five plots specially reserved for first-time buyers and owners of small properties wishing to build a detached house as their main residence, at the attractive price of €60 per square metre.

In Brittany, a square metre of land costs €87 on average, according to the latest study published by the Regional Directorate for the Environment, Planning and Housing.

Read more: Land for sale at €1 per m² in rural village in central France

The Plougasnou plots are just a 10-minute walk from the sea, with the cheaper ones measuring between 400 and 600m².

As well as combating rising property prices, it is hoped the scheme will help balance out the large number of second homes in Plougasnou.

In 40 years, second-home ownership has doubled in the small Breton town, data from the statistics agency Insee shows. Today, they account for almost as much of the housing stock as primary residences (44% compared to 49%).

“We've experienced strong property pressure due to an increase in demand from young retirees and second-home owners,” Plougasnou’s mayor, Nathalie Bernard, told Le Figaro.

“Prices have risen sharply, putting a brake on the arrival of new young households.”

To ensure the cut-price building plots are not snapped up by developers or people looking to erect cheap holiday homes, “only individuals wishing to build their own principal residence will be eligible,” the conditions stipulate.

“Applications to build a second home, seasonal rental property, offices or premises will not be accepted, nor will those submitted by property professionals.”

Successful applicants must apply for planning permission within one year of signing the deed of sale, and then occupy the house for a period of at least 10 years.

Applications can be made via the town planning department at the mairie.

Read more: ‘House price anger’ cause of Brittany arson attacks not nationalism

2. Homeowners will not be compensated for building faults if previous owners already claimed

If a homeowner was compensated for an issue with their property by an insurer – but did not fix it before selling the property – the new owners may not be able to claim for it again.

In a July ruling by the Cour de Cassation, an insurance company who rejected the claim of a farm owner over drought damage were in the right to do so, because they had already paid out to the previous owner over the same issue.

The insurer said the damage the new homeowner was seeking compensation for was merely the result of negligence on the previous owner’s part, caused by him not repairing the property with the compensation received.

The plaintiff took the decision to his local appeals court, arguing: “The insurer has a special obligation to provide information and advice to the person wishing to take out an insurance policy."

She added that the insurance company should have "informed the new owner of the existence of the previous claim.”

The courts ruled, however, that this information does not fall within the legal scope of what an insurer is required to disclose to new owners.

As the previous case had been closed, and the compensation paid in full, the insurer was under no obligation to share the details, said the court, throwing the case out.

Read more: Couple fight buyer’s €140,000 repairs claim for self-built French home

3. Banks may require bigger mortgage deposits for poorly insulated homes

People looking to buy properties with poor energy ratings have been warned they might be asked for bigger deposits to secure a bank loan.

Tougher legislation on buying and renting homes with a low DPE (Diagnostic de performance énergétique) means the score is now likely to be considered alongside an applicant’s personal financial situation when assessing mortgage risk.

Read more: Explainer: DPE survey and new energy audit for properties in France

Homes with the lowest energy efficiency ratings are being banned from the rental market unless they undergo renovations to make them more eco-friendly, as a result of the Loi Climat et résilience.

As of January this year, it has not been permitted to let out a property rated G+, for example, which consumes more than 450 kWh per m².

Over the coming years, this ban will extend to more categories, so that from January 1, 2034 rental properties must have a minimum category of D.

Read more: Timetable for new energy-linked restrictions for homes in France

"The energy credentials of a property are now taken into account by banks in the same way as the borrower's income or professional situation is, because it has an impact on the liquidity of the property, its future resale price and the borrower's monthly outgoings," Sandrine Allonier, a spokesperson for mortgage broker Vousfinancer, told Le Figaro.

"For a DPE of F or G, banks will ask for an extra 10% down payment or will only agree to grant a loan if a works package is included, or if a works loan is included in the financing, which can put a strain on your debt,” added Julie Bachet, Vousfinancer’s managing director.

“Some banks won't finance more than 90% of the property's value on this type of underperforming property.”

A spokesperson for the French Banking Federation said how much DPE was taken into consideration when negotiating home loans was “a matter for each bank.”

However, it conceded: "More and more, the DPE is one of the descriptive elements required to assess the proposed project.”

In the case of rental investments, it added, it was “essential” for a bank to know the DPE rating “in order to assess the customer's ability to rent the property for the duration of the loan requested.”

4. 10m² Paris flat attracts more than 700 applicants in seven days

Finally, property headlines in France this week have been dominated by a stark example of how tough it is to find a flat in Paris in the current climate.

Beanstock, a rental management platform, revealed that a studio measuring just 10.48m² in the 10th arrondissement, offered at €610 per month, had seen over 765 people come forward to view it in less than seven days.

It promised that the diminutive lodging “had been completely refurbished to a high standard, is energy efficient (DPE D) and very well equipped (television, washing machine, toaster, beautiful crockery and decoration, etc.).”

It is unclear if bathroom facilities are shared, but rules stipulate that a rent supplement (which this landlord has applied) cannot be claimed if a WC is on the landing.

Rent supplements (which take the cost of a property above permitted ceilings) are allowed if it has exceptional features, but the criteria are fairly broad. In this case, the flat reportedly includes an unobstructed view over the rooftops of Paris and a €136 supplement is included in the rental price.

Read more: How do I know if flat listing respects French rent control rules?

Rental pressure in the capital is set to increase further in the coming months as high interest rates stop investors from buying and tough restrictions on renting out properties with poor energy ratings see supplies dwindle.

Read more: Demand for rental properties in France soars

Rents in Paris and its suburbs already rose by 2.4% in 2022, according to the Observatoire des loyers de l'agglomération parisienne.

The average rent, excluding charges, was €1,230 in central Paris, for an average surface area of 50m². In the inner suburbs (Hauts-de-Seine, Seine-Saint-Denis and Val-de-Marne), it was €937, for an average of 52m². In the outer suburbs (Seine-et-Marne, Yvelines, Essonne, Val-d'Oise), the average rent was €855, with an average surface area of 57m².

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