#Homeowners #rent #freeze #property #collapse #Insolence
“Inflation continues to rise and this is weighing down households. According to INSEE, inflation now stands at 4.8% annually in April, compared to +4.5% in March and +3.6% in February. If the house car is hit, so is your rent. In a previous article we explained that the rental reference index (IRL) serves as a basis for reviewing the rents of empty or furnished homes. It is calculated based on the average, of the last 12 months, of the evolution of consumer prices without tobacco and without rents. Because generally, landlords review the rent every year on a date set in the lease.
To prevent these increases from continuing, the National Housing Confederation (CNL) asks the Government to freeze rents.
The rent freeze, the chronicle of a real estate disaster announced!
The situation of the real estate market is as follows.
1/ Prices are historically very high.
2/ Interest rates are going up very fast and very strong, which makes every day a little more potential buyers run out of credit.
3/ In order to continue renting, the owners must carry out very important works as part of the energy transition.
4/ Property taxes are skyrocketing as municipalities no longer have enough resources.
And in the face of all this, our kind leaders would think it would be a good idea to freeze rents in the midst of inflationary times also for landlords whose yields are collapsing.
The consequences are easily predictable.
As of today, Monday, anyone who finds out about a rent freeze in this context will simply turn away from real estate investment.
The market will crash at a speed that will surprise Bercy, sales will freeze very quickly, transfer taxes will collapse, and the government, by pulling too hard on the real estate rope, will create a terrible housing crisis of which the most vulnerable will be the victims.
In my STRATEGIES file dedicated to real estate I showed that the worst case the real estate market was the combination of a sharp rise in inflation and a rent freeze. If the government gives in to this demagogic decision, the market will plunge into an unprecedented fall.
If you are a homeowner or an investor, now is the time to understand the deadly relationship between rent freezes and inflation.
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Carlos Sannat
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