The government announces nearly a billion euros for intermediate housing

Nearly a billion euros will be mobilized “in the coming months” to create 10.000 intermediate housing units, the Ministers of the Economy and Housing announced on Thursday.

Reserved for tense areas where rents are soaring, intermediate rental housing (LLI) allows middle-class households whose income is too high to qualify for social housing to find a roof over their heads.

In return, those who invest in the construction of these capped-rent homes benefit from tax advantages.

Of this billion, 400 million euros will be "provided by 14 insurers" and "250 million euros provided by the Caisse des Dépôts et Consignations" (CDC), while the State "will mobilize its own funds", specified the Minister of the Economy Bruno Le Maire following a meeting with the federation of insurers and the CDC.

The objective, according to Bruno Le Maire, is to "massively develop the supply of intermediate housing which allows the middle classes to find accommodation at rates 10 to 15% lower than market rates".

“For that we need investments and we need investors,” added the minister.

For the State, “this is not budgetary expenditure, I want to make it clear, it is investment”, he insisted.

Insurers already involved

“Insurers are committed to providing more than 400 million (euros) of equity to finance the intermediate housing sector,” according to a government press release citing AG2R La Mondiale, Allianz France, Assurances du Crédit Mutuel, Axa , BNP Paribas Cardif, BPCE Assurances, CNP Assurances, Crédit Agricole Assurances, Groupama, Groupe MAIF, SMABTP, Société Générale Assurances, Suravenir and Groupe VYV.

“Intermediate housing is an investment category in which insurers are already massively committed,” indicated Florence Lustman, president of the France Assureurs federation, recalling that insurers were particularly committed to improving the energy qualities of these housing units.

In the second half of 2023, the government recorded a capital increase of 250 million euros within the Intermediate Housing Company, to quickly build 4.000 additional housing units, indicates Bercy.

After a phase of constant growth, production has reached a little more than 15.000 intermediate housing units per year, recalls the government press release, which wants to "double the production of intermediate housing units by 2026 in order to accelerate residential mobility, particularly since social housing.

“We are going to boost the LLI,” confirmed the Minister for Housing Guillaume Kasbarian who announced the signing next week of an agreement with the social housing and housing aid giant Action Logement, the CDC and the banks in the territories with the ambition of producing “75.000 housing units for the next 3 years”.

Our desire is "to better link this housing to work, to reindustrialization, to energy projects, I am thinking in particular of that of the EPR", underlined the Minister Delegate.

Mr. Kasbarian also recalled that a bill relating to housing will be presented "in the coming weeks (...) with a view to an examination at the end of June".

The finance law for 2024 also made it possible to extend the intermediate rental housing regime to new territories, to the renovation of old housing, and to residences managed for students, young workers or seniors.

Intermediate housing, the executive's martingale for the middle classes

Aimed primarily at the middle classes struggling to live in tense areas, intermediate housing has been strongly pushed by the government since 2017, but is sometimes accused of developing to the detriment of social housing.

What is intermediate housing?

As its name suggests, intermediate rental housing (LLI in real estate jargon) offers rent levels reduced compared to market prices, but higher than in social housing.

"We always say that this is the need in the most tense sectors, where very often there can be a significant gap between the rents of social housing and private housing, where the prices of both rents and accession can vary. 'pack it up', explains Hélène Joinet, researcher at the Paris Region Institute.

“It fills a missing link, which before was occupied by institutional investors”, such as insurers and banks, who withdrew from it in the 1990s-2000s, she adds.

Although it has existed for decades, the intermediate housing that is currently developing is based on a system created in 2014.

Lessors benefit from a double tax advantage: a reduced VAT rate on construction (10% instead of 20%) and an exemption from property tax for twenty years.

In return, they must apply a reduced rent and rent to households below a certain income ceiling.

Why is the government pushing it?

Since 2017, Emmanuel Macron and all his Housing Ministers have made the development of intermediate housing a priority.

The stated objective, summarized Thursday the Minister responsible for Housing, Guillaume Kasbarian, is to house the middle classes, "those who will not benefit, in their life, from social housing, and who nevertheless (...) do not arrive to find accommodation in the free market in areas under high tension", particularly in territories in the process of reindustrialization.

Who can claim it?

Applicants for housing must be below resource ceilings.

For a single person, the annual tax income must be less than 43.529 euros in the most tense areas (Paris, Lyon, Lille, Montpellier and their outskirts, Côte d'Azur, Swiss border).

For a couple without children, it is 65.057 euros in the same areas.

Concretely, the rents charged by in'li, one of the main intermediary landlords in Île-de-France, vary between 12 and 18 euros per square meter, compared to 5 to 12 euros in social housing and 18 to 30 euros on the market, explains its president, Damien Robert.

“I can understand that a couple on 62.000 euros in Paris would have difficulty finding accommodation in private housing. So there may be a need for intermediate housing for them. But we are not at all talking about the same income as the cashiers , caregivers, garbage collectors,” says Marianne Louis, general director of the Social Union for Housing, a confederation of social landlords.

The tenant selection procedures, as well as the checks once they have entered the accommodation, are also less supervised than in HLM, she notes.

Is it to the detriment of social housing?

This criticism, widely relayed on the left and among defenders of social housing, is recurring, while 2,6 million households are waiting for HLM.

It has increased in intensity since Prime Minister Gabriel Attal raised the possibility of including “partly” intermediate housing in the calculation of social diversity quotas.

The measure, accused of opening a breach in the SRU law (Solidarity and urban renewal) which obliges cities to respect a quota of 20 to 25% of social housing, will be included in a bill "for the housing of the middle classes " expected before summer.

“There is no reason for it to phagocytize!”, Guillaume Kasbarian wanted to reassure on Wednesday, assuring that we could “remain on ambitious objectives for the construction of social housing and promote LLI”.

Illustrative image of the article via Depositphotos.com.