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France's popular housing support to be cut
September 20, 2017 / 1:33 PM / a month ago

France's popular housing support to be cut

PARIS, Sept 20 (Reuters) - The French government on Wednesday announced cuts to a housing allowance scheme enjoyed by 10 percent of the population and promised to free up social housing for the most needy as it seeks to rein in public spending.

In the latest and increasingly unpopular reform from President Emmanuel Macron, the government unveiled measures to reduce the 40 billion euros ($48 billion) it spends on housing support annually but which have failed to fix a housing shortage.

It promised rent cuts to soften the blow.

Government ministers say the housing allowance known as APL, which cost the Treasury 18 billion euros last year, has inflated rents because many landlords set rent based on the housing allowance.

“The problem today isn’t the APL, it’s the high level of rents,” Julien Denormandie, the junior minister in charge of housing, told a news briefing. “If you reduce rents you automatically reduce APL allowances.”

Denormandie confirmed the government would trim housing allowances by 5 euros a month from Oct. 1 but stopped short of announcing future cuts, which French media have reported will be in the region of 50-60 euros a month.

APL contributions will now be calculated based on a household’s actual income, not its income two years previous -- a measure the government hopes will save one billion euros a year.

The French have long enjoyed generous housing benefits. Under the existing rules, one in 10 of France’s 65 million people is entitled to housing allowance.

Further reductions are likely to deepen pubic anger towards Macron, whose popularity has plunged in his first few months in office, primarily due to modernisation efforts.

These include the overhaul of the labour code and the proposed revamp of the employment insurance and pension systems.

HOUSING CRUNCH

Despite its huge cost, the current housing support system has done little to ease a housing crunch in many French cities.

France has 4.5 million social housing properties but only 10 percent are turned over to new tenants each year because the rules enable occupants to stay put even if their needs or financial means change.

Denormandie said a family’s needs would now be assessed every six years.

He also announced tax breaks for land-owners who sell plots in areas where housing demand is high for the construction of social housing and an easing of construction regulations, a move long called for by developers.

Opponents of Macron’s effort to overhaul France’s social and economic model brand the centrist leader a right-winger in disguise who favours the wealthy and big business.

An Odoxa opinion poll published on Monday showed that more than half of all French people consider the 39-year-old former investment banker a bad president. ($1 = 0.8338 euros) (Reporting by Richard Lough; editing by Luke Baker/Jeremy Gaunt)

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