The Solidarity Real Lease (BRS) in France offers a pathway to affordable housing by allowing tenants to rent or buy properties through solidarity land organizations. Established by law in 2015, it features regulated lease terms and eligibility criteria based on income and local agreements. Starting in 2025, new conditions will require occupants to declare their real estate ownership. The BRS provides significant cost savings and tax benefits but comes with limitations on asset value and resale options.
Understanding the BRS (Solidarity Real Lease)
BRS: A Pathway to Affordable Housing in France
The Solidarity Real Lease, as outlined in Article L. 255-1 of the Construction and Housing Code, is a unique arrangement where a solidarity land organization (OFS) provides tenants with real rights for either renting or purchasing housing. This arrangement may also include an obligation for tenants to either construct new buildings or rehabilitate existing properties.
The lease duration is strictly regulated, with terms ranging from a minimum of 18 years to a maximum of 99 years.
Legal Background of the BRS
Established by the law of August 6, 2015, which aimed to foster growth and promote economic equality, the Solidarity Real Lease was further clarified by Ordinance No. 2016-985 on July 20, 2016. This initiative has since been incorporated into Articles L.255-1 and subsequent provisions of the Construction and Housing Code.
Who Can Benefit from the Solidarity Real Lease?
Eligibility Criteria for the BRS
Not everyone can access the Solidarity Real Lease; various conditions must be met. Apart from financial status, eligibility is contingent upon agreements between solidarity land organizations and local authorities, which determine the types of households that can qualify.
Other factors may include proximity to the workplace and eligibility for social rental housing. Additionally, the property must serve as the primary residence for the occupant.
New Asset Conditions Starting 2025
From January 1, 2025, new conditions will apply to the Solidarity Real Lease (BRS). Prospective occupants will be required to sign a declaration affirming that they do not own real estate that is suitable for their needs or financial capabilities as a primary residence.
Moreover, individuals must confirm that they do not possess rental properties that could generate income sufficient for purchasing in the private housing market.
Income Caps for 2024
For the year 2024, specific income ceilings will dictate access to the BRS. These limits are established by decree and vary based on household composition and geographical location. The reference tax income from two years prior will be the basis for determining eligibility.
How Does the Solidarity Real Lease Function?
A Framework Between OFS and Local Authorities
Solidarity land organizations are non-profit entities formed by public establishments for intercommunal cooperation (EPCI), public land establishments (EPF), and HLM landlords. Their primary goal is to acquire land that is either already built or to be developed while retaining ownership of that land.
Beneficiaries Acquire Real Rights to Property
The Solidarity Real Lease operates on a model where land and building ownership is separated. Beneficiaries purchase the property and lease the land from a solidarity land organization at a typically reduced rent, making housing more affordable.
Advantages of Purchasing Property through the BRS
Significant Financial Savings
One of the most significant benefits of the BRS is the cost savings it offers. By only purchasing the structure itself, buyers can save between 20% to 40% compared to traditional property purchases that include both land and housing. This scheme enables low-income households to secure homes at below-market prices.
Tax Benefits and Guarantees
Additional advantages include:
- A reduced VAT rate of 5.5% for new properties.
- While maintenance charges and property taxes are the tenant’s responsibility, property tax reductions may apply based on municipal regulations.
- A buyback option for the property by the OFS.
- Access to financing through a zero-interest loan (PTZ) for first-time buyers.
Considerations When Opting for the BRS
Asset Value Limitations
With the BRS, properties remain under the ownership of the solidarity land organization, which means occupants cannot realize the full value of their property, limiting their potential wealth accumulation.
Fixed Lease Duration
The lease typically spans 18 to 99 years, which may create a sense of long-term insecurity for residents. Upon lease expiration, properties revert to the owning organization, and conditions for renewal can often be ambiguous.
Resale Restrictions
In the event of a resale, owners cannot freely set their sale price. Instead, the resale price is regulated according to predetermined criteria, potentially diminishing the financial return for sellers.
Access Limitations
The BRS primarily targets low-income households, which can exclude many potential buyers. Additionally, eligibility requirements can differ across regions, affecting accessibility based on geographical factors.
Steps to Purchase a Property under the Solidarity Real Lease
Working with Social Landlords or Developers
It’s important to highlight that solidarity land organizations (OFS) often collaborate with social landlords to market the Solidarity Real Lease. Encountering OFS directly can be uncommon; thus, the acquisition process typically involves a social landlord or real estate developer, especially for newly constructed properties.
Finding a Suitable Property
Prospective buyers can search for BRS properties through specialized websites or real estate agencies. However, it’s advisable to look directly at listings on dedicated platforms or the OFS website for the most accurate information.
Preparing Your Application
After identifying a potential property, candidates must compile an application file containing personal details, such as income and financial documentation. This file should be submitted to the solidarity land organization for review.
Awaiting Application Evaluation
Before a property is listed for sale, applications are anonymized and assessed based on a variety of criteria to determine eligibility for the BRS.