(EXPERT OPINION) Inflation, rising interest rates, real estate crisis… Should we draw the line at purchasing our primary residence these days? The decryption was done by our expert Cédric Brachet, founder of the MonLocatif website.
Prospective buyers and first time buyers, new property has benefits you shouldn’t overlook! Here are 4 ideas to consider before you get started.
1. Get an energy-efficient and functional case with a warranty
The housing, for which a building permit was issued from January 2022, meets the latest environmental regulations (RE 2020). In other words, they aim for more ambitious energy performances that help lower your gas and electricity bills. This standard ensures better thermal comfort, enhanced bioclimatic requirements and a reduction in carbon impact (life cycle of materials and equipment).
In addition to this advantage, the current buildings correspond more to the current lifestyle (organization and distribution of areas, lightness, the presence of a balcony, loggia or garden, etc.).
They are also covered by the following warranties:
- ten-year civil liability insurance of the project manager (valid for 10 years);
- ten-year civil liability insurance for craftsmen (even over 10 years);
- perfect finish warranty (which lasts 1 year);
- guarantee of correct function (two-year guarantee, covering 2 years).
2. Negotiating the price of real estate in a crisis context
While the current real estate context may deter some buyers, it also creates opportunities.
First, as interest rates rise, there are fewer potential buyers of real estate. Real estate developers are facing a decline in bookings for new housing (down 39.9% in Q2 2023). This situation is favorable for negotiations to obtain a rebate or pay notary fees.
Moreover, inflation leads to an increase in rental prices. This trend is exacerbated by strong rental demand in the face of a housing shortage. Short-term rentals dedicated to tourism (such as Airbnb) are indeed on the rise, and many owners are having to work to comply with the Climate and Resilience Act.
In this situation, borrowing with a fixed rate guarantees a stable monthly payment for the duration of the bank loan. In addition, the purchase of real estate represents savings and the creation of permanent assets.
3. Reduce your contribution with reduced notary fees and the new PTZ
By purchasing a new main residence, you will have access to notary fees of 2-3% instead of 7-8% in the old one (housing completed less than 5 years ago is considered “new”). Reducing these costs makes it possible to reduce the personal allowance, which generally has to cover additional costs (notary, application fees, etc.).
In addition, the purchase of a new collective housing in a “stressed” area entitles you to a zero-rate loan, adjusted for 2024, subject to resource conditions. This state support makes it possible to finance part of the transaction by releasing funds payable without interest. It thus reduces the amount of the loan from banking organizations and the expected personal contribution.
4. Get exemption from real estate tax and advantageous VAT
New buildings used for housing are subject to a temporary exemption from real estate tax for a period of 2 years after their delivery. To be eligible, you must submit your application to the tax center responsible for the accommodation no later than 90 days after the work is completed.
Buying your new main residence may also result in a reduced VAT rate of 5.50% instead of 20%. It refers to goods covered by a property ownership agreement in a priority zone (as ANRU reminds).