Real estate: the increase in these costs could put a brake on purchases in old properties

Is the timid recovery observed in the real estate market since the drop in interest rates likely to be cut short? Friday, November 15, the Prime Minister, Michel Barnier, announced the possibility, for the departments which so wish, to increase by 0.5 points, for three years, the ceiling of transfer duties for valuable consideration (DMTO), bringing the maximum rate of 4.5% to 5%

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Doesn’t that mean anything to you? So let's put it another way: if you plan to buy a property in the old property, act quickly because, from June 1, 2025, the notary fees, of which these DMTO represent the bulk of the amount, risk weighing more heavily within your budget. Allow 500 euros more for each purchase of €100,000, i.e. an additional €1,000 to pay for an investment of €200,000, or €2,000 for a project costing €400,000.

“Perennial temporary”

“As the intake is low among the youngest, this will make their first purchase even more difficult,” analyzes Maël Bernier, spokesperson for Meilleuxtaux. Price of goods, loan conditions, surge in property tax: the measure, if adopted by Parliament, will constitute an additional brake on purchasing. It “will have a heavy impact on all buyers, and more particularly first-time buyers”, adds Caroline Arnoult, general manager of the credit broker Cafpi.

Same story with the National Real Estate Federation (Fnaim). “Let’s not kid ourselves. What is presented as an option left to the free choice of local authorities will, in reality, be used by all of them. And temporary experimentation will end up definitively establishing itself in the French system,” predicts Loïc Cantin, its president.

Possibly counterproductive

Transfer taxes represent an essential resource for departments, which must finance social assistance, colleges, various public services and road maintenance. In 2023, they generated 15.8% of their operating revenue. However, this windfall, which depends heavily on the volume of transactions, has melted away with the difficulties of the real estate market. In 2023, the departments will (based on their population) share 13 billion euros. This is 3.7 billion less than in 2022. This year, they should still lose 35% of DMTO, representing between 20 and 30% of their revenue, warned François Sauvadet, president of the Departments of France, at the end of October.

Michel Barnier, who, at the same time, is asking the departments to reduce their spending by 2.2 billion, could hardly do anything to compensate, even a little, for this shortfall. Raising the tax ceiling on transfer taxes by 0.5% could bring in a billion euros to the departments, according to the Prime Minister. But be careful: the measure could prove counterproductive, by “discouraging some people from buying or reducing their investment capacity,” notes real estate expert Séverine Amate (Amate Réseaunance). Which, in turn, will reduce the tax revenue…