The rate of credits attractive to support real estate and investments in the form of “stone paper” – type REIT.

Acclaimed by the French, the real estate remains the largest component of their wealth, and their investments are preferred. The stone is well over 60 % of the average wealth of our citizens, three-quarters of which correspond to their principal residence, the remaining quarter (15% of their assets) representing other real estate investments.

With 970000 sales of residential units in 2018, the volumes of transactions remain close to the record of 2017, according to the notaries. For the tenth year in a row, prices have risen again in 2018, although the increase slowed down somewhat. Year on year, they increased by 2.9% in metropolitan France, according to figures released in January by the notaries, relating to the sales recorded at the end of September.

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The offset between the province and Paris tends to correct. The increase is accentuated in the region and has diminished in the Ile-de-France. But the situations remain disparate. Some cities see their prices skyrocket, such as Bordeaux (+ 17,2 %) or Rennes (+ 9,6 %), while they are diminishing in others, such as Toulouse, Reims, Grenoble and Bourges. Within the same region, one sees raising or lowering prices in cities, like Caen (+ 8,7 %), or Rouen (- 0,2 %), of comparable size (about 110000 inhabitants). If Paris continues to break highs, more than 10000 € per square metre in many areas, the catch-up accelerates in the province, where prices are close to their last peak reached eleven years ago, at the beginning of 2008.

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prices rise in some cities, but fizzle out in others.

Source : notaires

The prospect of regular income

The residential real estate remains supported by interest rate very favourable. Early this year, it is possible to borrow about fifteen to twenty years to average rates often lower than 1.5 %, excluding insurance. “For a loan, the necessary revenues have declined 30% in ten years. The borrowing capacity has almost never been as high,” notes Hervé Hatt, president of Meilleurtaux.com.

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death insurance mandatory weigh-in contrast to heavier and heavier in the cost of the credits. For many borrowers, the aggregate amount of guarantees, insurance and other costs or fees related to the purchase of a dwelling, can pose more of a point of annual percentage rate, the APR. On a loan at a nominal rate of 1.2 %, a borrowing 56-year-old sees his APR of 2.2 % including the insurance provided by the bank. Even if the delegation of insurance is facilitated by the regulations (including the amendment of the senator Martial Bourquin allowing for 2018 to terminate the insurance borrower to change in the course of the contract), “the borrowers find it difficult to play the competition,” said insurance broker loan Magnolia.fr. We can, however, save several thousands of euros through an insurance broker, for a loan.

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beyond the purchase of their own homes, investors are attracted by the promises of the rental investment live. It is true that real estate is reassuring. While the yield of risk-free assets continues to plummet and that the jolts of the stock Exchange concerned, investing in a home offers the prospect of regular income, with the possession of real property the value of which seems to be solid. The rental property has always benefited from tax incentives aimed at supporting the construction, like the device Pinel, extended until December 31, 2021. The latter provides a reduction in annual tax of 2 % of the purchase price of a rental property new in a box, “tense”, that is to say, in the paris region, in the suburbs of French of Geneva, on the Côte d’azur and in the largest cities of the province, in consideration of a rental commitment of nine years (18% tax reduction), and 1% in the following years, bringing the advantage to 21 % the investment for a rental commitment over twelve years.

new since 2019, the tax exemption, up to now reserved for new housing, is extended to the rental investment in the former by Julien Denormandie, minister in charge of the City and the Housing since mid-October. “For the first time, a device of rental investment relates exclusively to the ancient habitat”, analysis Alain Dehaudt, director of the agency departmental information on housing (Adil) of the Oise. The device Denormandie provides the same benefits that the law Pinel (from 12% to 21 % of the amount invested in tax cuts), but for the purchase of a home is old with work corresponding to 25% of the purchase price. “Such a budget is feasible for homes, but it is more rare to have 25 % of the sale price in the work to perform in a condominium apartment,” explains Alain Dehaudt. It depends on the extent of the renovations (insulation of walls from the inside, individual boiler, repair of security electric and gas…). The anticipated announcement of the work eligible should clarify this point.

Of relief in case of moderate rent

Second newtee, “you can greet the increase in the deficit in land chargeable on his total income in case of agreements “for Rent affordable”,” adds the expert of the Adil. In normal times, when the expenses of the owners exceed the rental income, loss of land, excluding loan interest, is due as a deduction from the total income, in the limit of 10700 € per year. In the framework of the act the Elan of the November 24, 2018, this amount goes to 15300 € for the donors who opted for the device Rent affordable.

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In return for a moderate rent, the owners were already receiving reductions of 15% to 85% on their rents taxable. Finally “the recognition Rent affordable with work now applies in area C, without obligation to resort to the intermediation rental,” said Alain Dehaudt. Additional flexibility for investment rental old and the renovation of the habitat.

More accessible than the purchase of a rental property, the real estate investment trusts (REITS) are mutual funds that buy and manage property (offices, shops, etc) in the distribution of the rents, and capital gains to their purchasers. Investors still have subscribed to more than 5 billion euros in 2018, carrying their investments in these funds to € 55 billion. What attracts them : the prospect of a regular income. Their purchases of REITS have doubled after the crash of 2008, and then again doubled since 2014, in response to the fall in interest rates and returns of life insurance in euros without risk. In 2018, 175 SCPI proposed by a thirty-management companies have distributed an average income of 4.35 % compared to their market value, compared to a 4.43% in 2017, according to the French Association of real estate investment trusts (Spamis).

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Attention to the cost of purchasing SCPI

Immorente, the management company Sofidy, the largest REIT market, with € 3 billion of wealth invested in over 2000 real estate, has been distributed to 4.7 % revenue in the last year. “Excellent performance is obtained thanks to the increase in the rate of occupancy of the premises, over 93%,” explains Jean-Marc Peter, director-general of Sofidy. Effimo 1, SCPI of Sofidy specializing in office, has also benefited from a new adjustment of its revenues, to 5.06% in 2018.

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“We have also moved dividends from our REIT,” says Eric Cosserat, president of Périal. Participation in land PFO2, first-SCPI environment with a wealth of 1.9 billion euros constituted 89 % of office buildings-saving energy and water, has seen its yield go up to 4,51 % in 2018. Corum has for its part increased the dividends of its SCPIS 7,28 % for Corum Origin and 7,91 % for Corum XL.

Practice >> Learn more about investing in REITS in partnership with Corum

Attention, in the context of a subscription by direct, the income of the REIT must be carried forward in the tax return as income property. Including social contributions, rents are taxed between 47.2% and 58.2% for most taxpayers. You can also purchase REITS in the form of units of account in life insurance contracts multi-media. In this case, their incomes benefit from the reduced taxation of life insurance, but they are being eroded by the annual management fee of the contract. Another subtlety, the purchase costs of the REITS are commonly from 8 to 13 %, but this information is not clearly displayed to investors. If they should get their money back before a dozen years ago, they may be surprised by a loss related to these costs alone. It’s better to know.

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More flexible than REITS, collective investment institutions in real estate (OPCI) are also experiencing a growing success. With 2.1 billion subscriptions in the last year, the 18 new vehicles open to the general public managed $ 15.1 billion euros at the end of 2018, according to the Spamis. These organizations invest such as REITS, in real estate managed directly, but also in real estate investment companies listed in the stock Exchange (SIIC), which represent about one-eighth of their assets. More volatile than the REIT, but much more stable than investment funds stock market, the real estate mutual fund have delivered average returns of 1.2% in 2018.

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The real estate investment trusts (REITS) are acquiring real estate, they redistribute rents and capital gains to their purchasers.

Source : IEIF, companies