Rent freeze, at the moment the increase will be restricted to 3.5%! – Insolentiae

It’s a hot topic that will find its first conclusion on Monday.

Why the first conclusion? Because inflation is likely to be much more permanent and much stronger than we want you to believe right now, and so there will be kinds of decisions made every year.

Therefore, the government will limit the increase in rents to 3.5% in one year, which is well below the rate of inflation that should have been re-billed to the tenants.

While inflation could reach 6.8% in September and is expected to average 5.5% annually, the government is trying to avoid a very strong spread of price increases in rents. After consulting with representatives of tenants and owners, teams from the Ministry of Economy and Environmental Transformation finally proposed a “shield” to limit the increase to 3.5% over one year. At the same time, a reassessment of the same rate of Personal Housing Assistance (APL) should be proposed on July 1.

The 3.5% figure, which should apply to the last two quarters of 2022 and the first of 2023, is a “compromise, between the willingness of the tenant representatives who requested a total freeze and those landlords requesting did not want to touch the IRL calculation formula,” said the entourage. To the Minister of Economy. The first solution was quickly rejected by the executive branch who saw it as a “false good idea,” arguing that the owners were also affected by inflation and suffered increases in their fees (works, property taxes, etc.). “With the freeze, we will renovate and start construction.” It was emphasized.”

And yes, because the problem is that if the profitability of real estate collapses to the owners (who everyone knows are always very rich, and therefore very mean, while tenants are very poor and very kind and vote for the good), there will be no business, no construction, no new housing to come. And eventually, very quickly, you will face a terrible housing crisis.

So you have to maintain balance.

Besides, on the side “These decisions are favorably accepted by industry professionals. It’s fairly prudent,” says Stefan Fritz, President of Jay Hoeke, stressing that “this avoids excessive rent increases and subsidy increases protect landlords and tenants alike.” “.However, he points out that these measures, if effective in the short term, cannot be a solution to the problem of price inflation faced by the sector.”

And herein lies the whole difficulty, not the present but the future.

How to keep the real estate market afloat and renters solvent without destroying landlords in a world of sustainable inflation without a wage index!

Things will get very complicated in 2023 and 2024.

Charles Sannat

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