After a 2018 year marked by low credit rates and a policy of banks focused on winning new customers, 2019 will it be conducive to rental investment? Features of the finance law, levels of real estate rates … The context at the beginning of the year.
The 2019 Finance Act, a favorable legislative arsenal for investing in 2019
Good news for investors: the Pinel is renewed in 2019! Admittedly, a refocusing has been made on zones A, Abis and B1 called “tense” zones. But apart from this refocusing, the device remains unchanged compared to 2018.
As a reminder, to benefit from the Pinel, the investor agrees to rent the property for a specific period. Thus, a 6 year lease gives access to a tax reduction of 12%, rent over 9 years gives entitlement to a reduction of 18% and a rental commitment of 9 years, to 21%.
The purchase price of the property must be less than 300 000 € with a price per m2 under 5 500 €, and the device is also subject to ceilings of rents as well as conditions of resources for the tenants.
To complete the Pinel, valid in the new and in tight zone, also note a novelty: the Denormandie amendment. This device targets old properties located in areas to be revitalized (empty, dilapidated dwellings, etc.), particularly in 222 municipalities that have signed the “Cœur de ville” convention. To benefit from this, the investor undertakes this time to carry out works representing at least 25% of the total amount of his acquisition. Regarding the purchase price, the rental commitment and the price per m2, they are identical to those of Pinel.
Finally, the Censi-Bouvard tax reduction has also been extended (until December 31, 2021). This law gives access to a reduction in income tax of 11% of the investment made, with a ceiling amount of € 300,000. The investment in question must be for furnished accommodation in a serviced student residence, or in a residence for the elderly or disabled. The rental commitment is for a period of at least 9 years.
Withholding tax: a brake to invest?
One can indeed fear that the levy of income taxes related to rents weighs too heavily in a budget. This is why a 60% deposit is paid by the tax authorities in order to avoid a cash advance effect too important.
The rental tax levy is made monthly, or quarterly if requested. Note for those who have already invested: the land income taken into account are those of the last statement (2017 income). The regularization will take place with the declaration of the next spring: which is valid for both the deposit and the levies.
Low real estate rates: a good reason to get started
If the 2019 budget law creates a favorable context, mortgage rates are also proving favorable for rental investment. For the moment, there is no indication of a rise in real estate rates: the ECB maintains its economic policy, the OATs are low, the rates of wear are down. Instead, there is stabilization, which should continue for at least the first half of 2019.
At the beginning of February 2019, average property rates are lower than the historical rates of autumn 2016: we can borrow between 1.05% and 1.35% over 15 years and between 1.24% and 1.60% over 20 years , excluding negotiation.
On the banks’ side: significant haircuts depending on borrower profiles
Once again this year, banks are setting important targets and pursuing their attractive policy with the aim of winning new customers. This goes through sometimes significant haircuts on their rates of property. An attractiveness all the more necessary as the real estate market, it promises to be difficult, with a first quarter down.
But this year, banking institutions seem however to privilege specific profiles, they want to attract, giving them the best conditions of real estate rates. It should be noted that debt-free loans are still possible (and accounted for 15% of first-time buyers in 2018), as well as the extension of borrowing terms.
It will be understood, the context is rather favorable at the beginning of the year. However, the conditions offered by the banks may vary depending on the profiles, it is advisable to compare mortgages and compete to obtain the most advantageous conditions for the investor.