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The difficult beginnings of the Denormandie device

Benefit from a tax reduction that can reach 21% by renovating old housing with a choice of 245 cities may seem attractive. But watch out for the constraints on the investor.

By Nathalie Coulaud Posted today at 06:00

Time to Reading 4 min.

Subscribers article

Places as diverse as Morlaix (photo), Fontainebleau, Blois, Cahors, Vichy and Agde are eligible for the Denormandie scheme.
Places as diverse as Morlaix (photo), Fontainebleau, Blois, Cahors, Vichy and Agde are eligible for the Denormandie scheme. Guy Thouvenin / robertharding / Photononstop

Will the Denormandie scheme, named after the minister in charge of the city and housing Julien Denormandie, really work? A decree and decree published on March 26 outlines the outlines and make it operational. It remains to convince investors.

For the moment, it is a bit early to say whether success will be there, even if all real estate professionals and local elected officials have recognized the interest of the approach. "Finally a device for old private housing, which had not obtained anything for many years "Says Christophe Demerson, president of the National Union of Real Estate Owners (UNPI).

Voted in the finance law for 2019, the Denormandie allows investors who renovate old housing to benefit from a tax reduction of 12% if it leases for six years, 18% for a lease of nine years and 21% for twelve years. The renovation work must be substantial and represent at least 25% of the amount of the real estate transaction, ie the amount of the purchase added to that of the work. "For the purchase of a housing of 150 000 euros, it is necessary to realize 50 000 euros of works", says the Ministry of Housing. The amount of the investment must not exceed 300,000 euros and, in total, the tax reduction may reach 63,000 euros.

Read also Where to invest in Pinel this year?

Housing must be located in one of the 245 cities of the Action Coeur de ville program, which aims to revitalize the centers of medium-sized cities, or cities that have signed a regional revitalization operation (ORT). Action Coeur de Ville mobilizes € 5 billion over five years and consists in developing a new commercial offer in the city center and supporting retailers in the digital transition.

The ORTs, they provide legal and tax means to local elected officials to revitalize their center. Places as diverse as Morlaix, Fontainebleau, Blois, Cahors, Vichy and Agde are therefore eligible for the Denormandie scheme. No particular perimeter has been set in the different cities, so 90% of the homes are potentially eligible, according to the Seloger ad site.

Attention to the rental demand

However, this investment is not without risk. A survey of Betteragents estimates that in some cities the rental demand is not sufficient. Tenants must, in fact, meet strict income conditions that vary according to the location of the dwelling. On the other hand, rents are also capped and can not exceed 17.17 euros per m2 and per month in the most expensive places, and 8.93 euros in the cheapest areas. These conditions limit the number of eligible tenants.

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