The real estate crisis: “We have to rethink the whole system”, Philippe Briand

Philippe Briand, founder of the Arche holding, which includes more than 2,800 agencies under the brands Citya Immobilier (2nd largest player in real estate management in France) or real estate franchises Laforêt, Guy Hoquet, Century 21 and Nestenn, presents his vision of the real estate crisis and conveys his analysis by Ariane Artinian. Exclusive interview.

MySweetImmo: What is your take on the real estate crisis?

Philippe Briand: We are living through one of the most significant crises since World War II. The population is increasing, cohabitation is increasing, but we don’t know how to meet the demand.

More and more people are living on the streets and couples who are no longer in love can no longer separate.

The situation of students is alarming: last year 16% of young people accepted through Parcoursup gave up their studies due to lack of accommodation, this year it will be the same, or even more!

Of course, the situation is worsened by the impossibility of re-renting apartments that do not meet insulation and energy saving standards. The rental of poorly insulated accommodation is prohibited; poor workers, supermarket cashiers sleep in their cars.

The extent of the housing production deficit is such that the rent shortage will increase in the coming months.

And to top it all off, everything is being done to discourage investors from putting money into real estate. If they buy US stocks like Microsoft or Apple, they are taxed at a maximum rate of 30%. But if they invest in housing in France, they are subject to income tax that can easily reach 40%, property tax that has doubled in three years in some municipalities, MFI… and zero rental income. With all these fees, the owners no longer have the funds to invest in renovations.

The market freezes and freezes, reducing turnover in the rental market. Especially since the crisis also affects social housing. HLM offices build much less.

MySweetImmo: Is rent control the solution to help the French find housing?

Philippe Briand: No, quite the opposite. When rents are limited, owners prioritize the best files and the best profiles.

The result? Only people with a good situation can access the accommodation. The middle classes and the most vulnerable are excluded from the market.

MySweetImmo: What do you recommend for reviving a rental investment?

Philippe Briand: We must not forget that investors are primarily motivated by profitability. When you invest in real estate and pay off your debts every month, you create savings, but if those savings don’t yield anything, you stop investing.

Putting €400,000 in the bank at 4% yields €16,000 a year, while real estate returns close to zero. The entire real estate system needs to be reconsidered!

Today we are in escalating complexity, with disorganized intervention by state and local authorities, which is not working.

In cities where property taxes have increased significantly, our multi-investors prefer to sell their properties!

MySweetImmo: The treasury is empty. What should the government do? What are your recommendations?

Philippe Briand: Raising property taxes in rent-restricted cities is heresy.

The first thing that needs to be done is to intervene to limit tax increases where rents are limited, so that they stop discouraging investors.

We then need to review the taxation of capital gains tax. In France, you are exempt from capital gains tax after 25 years. Couldn’t we lower that limit to 15 years? The shortfall for the state would be largely offset by transfer tax revenue. Everything has to be in place to create a supply shock.

MySweetImmo: Are you a proponent of destruction/reconstruction?

Philippe Briand: Please distinguish. Some buildings with good distribution, good thickness and beamed ceilings can be reconstructed, but others deserve to be destroyed cleanly and simply – look at these buildings that have collapsed in Marseille and other cities.

Rehabilitation costs almost the same as a new building, around 2,500 euros per square meter. Why not think about a bonus for scrapping housing, like we did for a bonus for scrapping old, polluting cars? If we really want to rehabilitate, we must have a plan for the destruction and reconstruction of quality housing.

MySweetImmo: Should we invite owners of empty homes to put them back on the market?

Philippe Briand: The figure of 8% vacant apartments in France is a myth! We manage a fund of 400,000 housing units, we have a warehouse of around 1,200,000 housing units, and I do not know of any owner who would voluntarily leave his housing empty.

The reality is that some people are taking their properties off the market because they cannot afford to renovate them, especially in poor neighborhoods where it is difficult to find tenants. And others leave them empty, yes, but long enough to settle the inheritance.

MySweetImmo: Do ​​you condemn the impact of housing production on the economy?

Philippe Briand: For every new house built in France, 20% VAT goes directly into the state’s pockets.

For a new property sold for an average of 300,000 euros, 60,000 euros is VAT income. A drop in production of 150,000 units represents a loss of tax revenue of 9 billion euros.

And that’s not all. It also means less work for construction firms, less training for apprentices and less corporation tax revenue. This also reduces housing affordability and affects students and low-income families in particular.

Basically, if you are rich, you can always find accommodation for your child in Lyon, Bordeaux or Toulouse, but if you are only financially, you will be stuck. The so-called social policy of some municipalities excludes the most modest. To solve this situation, it is necessary to create a supply shock.

Philippe Briand: Paradoxically, I’m quite an optimist. Because we are nearing the end of the system and will necessarily have to recreate it.

Housing is a primary need, as are food and clothing. You have to be careful that the properties are not too expensive. And to do that, we need to rethink the system, review the capital gains tax and overhaul housing creation.

Philippe Briand: We are doing fairly well. Our cash flow is slowly diminishing, but our equity allows us to keep our employees employed. We also plan to recruit 1,500 people this year. We’ll be ready when we move on.

Our Citya companies are strong because they do a lot of property management and have more and more clients. As for our franchisees, they fight on the spot and resist better than independents who go through the ordeal on their own.

Professionals who go out of business are often those who used the flight to trade in a car or buy a boat, that’s not the spirit of the house. Those who have built their own resources will survive the crisis!

MySweetImmo: What drives you?

Philippe Briand: My only real passion, aside from my family, is growing the company I’ve dedicated my life to. After three weeks I gave up the post of minister by leaving the government of Raffarin II because I had to choose between business and politics.

What makes me happy is when Glassdoor recognizes us for employee satisfaction at work, when Les Echos-HCG rewards us for the quality of our customer service. At the Century 21 World Congress, a few weeks ago in Las Vegas, I was very proud that Century 21 France won the award for the best developer in the world, it’s a great reward for a team that spares no effort.

My biggest pride is that I think 24,000 families are alive because we built a solid business. That’s almost as much as Airbus in France. It is nothing.

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