Brighter outlook for social housing in France

In France, d emand for social housing has been strong and the construction in the sector has been promoted by public policies. While the supply of social housing has been vast, well above the European average, it has been continuously below households’ demand resulting in very low vacancy rates . The social housing sector is highly regulated and only few organizations have a permission to be involved in the sector’s activity . The companies active in the sector benefit from strong public support , such as state subsidies and tax advantages. Also, these organizations receive loans from the Caisse des dépôts et consignations (CDC) at extremely preferential interest rate s and long-term maturities. Yet, the sector has faced many reforms in recent years . The loi de finance 2018 reduced the financial flexibility of social housing organizations as it has among others increased taxes and requested social housing organizations to decrease rents . This has adversely affect ed sector’s prospects , potentially rising the need of an involvement of private investors. However , the increased pressure on HLM ( Habitation à Loyer Modéré ) organizations has been part ly offset in 2019 via a slightly lower forced decrease in rents and a reduction in some VAT rates. In addition, t he CDC developed two programs to boost investment in social housing and improve financial stability of HLM organizations , of which the impact is estimated at around €36bn . These positive developments combined with a decline in the Livret A interest rate to an all-time low of 0.5% in February 2020 clearly brighten the outlook of the social housing sector .