In view of rising rents, the government is testing the terrain

How can you curb rising rents? The government on Wednesday consulted real estate stakeholders on the thorny issue of severe spending restraint by the French amid a surge in inflation.

With purchasing power becoming the top priority for the French, the issue is crucial for Elisabeth Borne’s government, which needs to win general elections on June 12-19 to remain in office. Because inflation, particularly under the impact of the war in Ukraine, is rising to levels not seen in thirty years (+5.2% over 1 year in consumer prices).

Expensive immediate measures

So far, the executive has reacted with often costly immediate measures: “SME subsidy”, energy check, blocking of gas prices… Housing costs remain one of the most serious items of expenditure and are caught up with rising prices.

In the first quarter, the Reference Rent Index (IRL), which sets the annual increase allowed for landlords, jumped to 2.48%, a level not seen since 2008. Indexed to the price development on consumption (excluding tobacco products and rents), it will therefore continue to rise over the last 12 months if nothing is done.

No rent freeze

On Wednesday, this IRL was at the heart of discussions between representatives of property professionals and Ministers Bruno Le Maire (Economy) and Amélie de Montchalin (Ecological Transition), according to several participants polled by AFP. Above all, it was “a consultation exercise in which the aim was to let the actors have their say,” emphasizes a person from the Montchalin area whose responsibilities include housing. The ideas expressed should help the Prime Minister make a decision on a draft Purchasing Power Law, which is due on June 29.

The rent freeze proposal put forward by consumer and tenant associations but rejected by experts appears to have been scrapped. “They have made it very clear to us that they are not going for a total rent freeze because they are aware of the weight this will have on landlords,” Emmanuelle, president of the Social Union for Housing (USH), told AFP Cosse, the social economist represented. “Everyone agreed that the rent freeze was not good,” said Danielle Dubrac, president of the trade union United.

Many ideas

The participants nevertheless put forward ideas to make the increase in the IRL less painful: not revaluing it for a year from this summer, smoothing it by taking into account the average index of the last four quarters, or reforming its calculation method to account for it exclude energy prices, which contribute to accelerating inflation. Without preferring a solution for the time being.

On the state side, it is emphasized that stakeholders were asked about the purchasing power of tenants, but also about the need to support housing construction in order to lower prices. This rather medium-term measure is a constant requirement of the Association of Property Developers.

The USH also called for a reassessment of the housing allowance (APL), which was cut during Emmanuel Macron’s first term so as not to undermine the financial capacity of social landlords to refurbish buildings. A request also made by the Abbé Pierre Foundation (absent), for which increasing the APL and social minima would make it possible to target the most vulnerable households.

Thursday afternoon events

The meeting will be quickly followed by discussions with other housing stakeholders such as: B. Associations defending tenants and fighting poor housing.

The most prominent of the left, such as Droit au Logement (DAL), called demonstrations on Thursday afternoon to demand strict measures: a freeze on rents, an increase in the APL, an end to evictions…

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