That’s it, it’s time to house your student… So what’s the best solution? Buying or renting a house? The point is with the fandom.
Returning to the university world has its share of questions related to the search for housing, especially in 2022, given the real housing shortage affecting the French market. As such, is it wise to invest in real estate to house your student son? When should you choose to rent? Does higher interest rates affect the scenarios much? Supporting characters, FNAIM gives some advice.
Two solutions: rent or buy
The preparation for the summer holidays is also in harmony with the preparation for the beginning of the new school year in the future: a large number of future graduates are preparing to join a very long list of “housing candidates”. The challenge is great, and confronts the mismatch between supply and demand, even if, for parents and future students, this research is an opportunity to choose between leasing and acquisition.
Two distinct strategies, the advantages of which depend on the target cities, the type of property, the budget, the estimated duration of studies, the potential aid by project (allowances, renewal bonuses, etc.), but also on the possibility and desire to build wealth.
Is it time to invest? Several things to consider
To aid decision-making, recent figures from the National Real Estate Association and Clameur Rental Monitor allow 30 French municipalities to compare rates of return with most students and illustrate the economic realities of each option.
Top 30 French Student Cities ranked by net rate of return (estimated at 75% of total return)
In this acquisition logic, estate tax exemption schemes can be adapted to the situation. Here Pinel (acquisition of new housing in areas A, Abis and B1) or there is Denormandie (acquisition of old housing in one of the 222 cities marked Cœur de Ville, which will be the subject of work representing at least 25% of the price). These two systems allow a tax reduction of up to 21% of the investment within a maximum of €300,000. Even better, they offer the possibility of renting the property out to his or her assets or descendants provided they are not tied to the owner’s tax home.
Compare monthly payments when buying1 and rent
It is interesting, first of all, to compare the amount of the monthly payment that the purchase will represent with the average rent for a studio of 25 square meters. For some cities, the difference between loan repayment and rent is minimal. In Dijon, for example, you’ll have to pay – again for a studio of 25 square metres – €338 per month if you choose to rent, compared to €378 per month for buying over 20 years. The same in Marseille, where the rent will be 366 euros compared to 394 euros for the monthly loan payments. In Nancy, Amiens and Clermont-Ferrand, it will be cheaper to pay off a loan than rent.
The rate of return (the ratio between annual rental income and the purchase price) is also an element to look at and consider, FNAIM recalls. ” In financial terms, this is the element that will serve as a benchmark for assessing the profitability of your investment.“,” defines Jean-Marc Turillion, President of FNAIM.
Be careful to anticipate all fees that may affect the budget (condominium fees, property taxes, potential business, etc.).
In terms of a net rate of return for acquiring a studio of 25 square metres, the average rent of which is always higher than any other apartment, Nancy leads the applicable ranking (5.3%), ahead of Amiens (5%), Clermont-Ferrand (4.7%), Marseille ( 4.2%) and Grenoble (4.2%), far ahead of Lyon (2.9%) and Paris (2.5%).
” You should be careful to take into account all the cost criteria, compare the rental price with the monthly payments of the loan, and feel free to have a professional accompany you. comments Jean-Marc Torrollion, President of FNAIM. The rate of return is one indicator among many others. Because in Nice, Rennes or Lille the offered rate of return around 3.5% is interesting, but it must be reduced to the purchase price (between €110,000 and €120,000 for an area of 25 m²) which is far from affordable for all budgets. »
In Nancy, the average monthly rent for a studio of 25 square meters is 371 euros, compared to 739 euros in Paris. By comparison, the monthly payment for a rental investment in Lorraine is still €316. In Paris, this monthly amount rises on average to 1,345 euros.
Return rate and purchase price: big gaps
Expect resale and higher rates
For those choosing to invest, the potential gains from resale should also be considered. However, this varies greatly by city, economic context, and length of detention. Thus, in Saint-Étienne, this profit will be 2,800 euros and 1,110 euros in Brest, in the case of resale after three years in the context of stable prices.
But beware of the temporary holding period! In Lille, in the event of a resale after only three years of detention, the potential gain would eventually become … a loss, estimated at 3,114 euros. This loss will amount to 3,445 euros in Rennes, 5,494 euros in Lyon and up to 12,516 euros in Paris. It is therefore necessary to include in the accounts all costs related to the purchase (agency fees, notary fees, etc.) that could affect potential capital gains at the time of resale.
In the context of rising interest rates, it is also interesting to take the lead when a child enters higher education. ” The warning signs are multiplying, and credit rates are starting to rise again. However, they are still attractive rates, but maybe not for longJean-Marc Turillion explains.
Leasing remains a popular flexible solution
Whether by choice or in the face of rising prices, rent remains a popular solution for finding housing for children.
Especially since, unlike purchasing, there are many financial aids depending on the family’s resources – notably Personal Assistance for Housing (APL) and Social Housing Allowance (ALS) – to allow for a price reduction. rent.
“Finding the right student rental requires some feedbackwarns Jean-Marc Turillion.It’s best to anticipate and arrive early to have more options. The ideal being is to be able to navigate to determine the ideal location, depending on the means of transport, shops and places of study . Additionally, energy costs and rental fees must be taken into account.
Importance of “Green Value” …
Since July 1, 2021, a new Energy Performance Diagnostic (EPD) has been in effect. Mandatory for all housing for sale or rent, now indicates the level of greenhouse gas emissions, as well as the level of energy consumption. A tool to discover energy-intensive accommodations, where F and G rated ones are prohibited from being rented by 2025.
“Be careful to consider the “green value” of housing at a timeThe purchase, explains Jean-Marc Turillion.A property classified F or G will require short-term renovations so that it can be rented before 2025. Dedicated schedule to be planned“.
In the event that the choice is directed towards renting rather than buying, this new tool makes it possible to know the risks of increasing the energy bill.
1 For purchase estimates, the assumption is based on a 20-year loan at 1.60%.