Loc'avantages : you can submit your application!

As part of the reduction of inequalities and the fight against poor housing, the government is continuing its efforts by rewarding the efforts made by private landlords. This year, they can benefit from a new tax relief scheme: Loc’avantages.

Since 1st April 2022, any landlord of an unfurnished property has been able to submit their application to the National Housing Agency (Anah). Here is a closer look at the history, principle and conditions for benefiting from the scheme.

Adapting an existing scheme

Loc’avantages is not a completely new initiative, but rather an adaptation of the Cosse scheme “Louer abordable” (“Affordable Renting”) which appeared to be reaching the limits of its effectiveness. While 154,000 private landlords benefited from it in 2017, by 2021 this had fallen to 111,000.

Recall that Louer abordable involved granting tax advantages to owners who agreed to reduce their rent. Since early 2017, it was possible to obtain a deduction on rental income, ranging from 15% to 85% depending on the geographic area where the property was located, the rent level and the property management arrangement.

Alongside the tax deduction, the government intends to substitute, through Loc’avantages, a tax reduction which is normally more advantageous and therefore attractive. Note that in the new scheme, the tax reduction is now the same for the entire national territory and thresholds are set by decree, as detailed below.

What is the principle?

Loc’avantages relies on incentivising a reasonable rent policy, with private landlords benefiting financially through a tax reduction. Put simply, the lower the rent, the greater the tax reduction – within certain limits, of course.

The benefit for landlords is primarily to facilitate renting out their property: in a highly competitive market, a quality property offered at a reasonable rent will have every chance of finding a tenant and renewing the tenancy if needed. The gain is twofold – by giving themselves every chance of avoiding a void period, the landlord protects themselves against a direct financial loss when they probably have a mortgage to repay.

The scheme aims to bring private sector rents closer to those in social housing and thereby fight inequalities on one hand, and enable an increasing number of households to avoid falling into housing precarity on the other. A welcome idea, given that purchasing power is on everyone’s mind today amid soaring inflation.

What are the conditions for benefitting?

To qualify for Loc’avantages, the following criteria must be met:

• Renting out an unfurnished property for at least 6 years;
• The tenant must not be a family member of the owner;
• The property must be the tenant’s primary residence;
• The property must be rented under an agreement with Anah, respecting rent caps and tenant income thresholds;
• The rent must not exceed the thresholds set according to different brackets corresponding to various levels of tax reduction;
• The property must not be a thermal sieve (energy performance certificate rating of F or G).

Rent thresholds set by decree

On 1st April, a decree was published setting out the rent thresholds applicable under the Loc’avantages scheme. Three levels of tax reduction were decided, depending on the reduced rent level chosen by the owner between Loc1, Loc2 and Loc3 corresponding to the agreement signed with Anah: intermediate, social or very social.

These levels correspond to the rent reduced downwards, based on discounts applied after observing the market rent in the area. To determine the reference rent for your property, Anah provides an online simulator. The discounts are then always the same:

• Loc1: the rent is reduced by 15%;
• Loc2: reduction of 30%;
• Loc3: reduction of rent by 45%.

A distinction is also made depending on possible rental intermediation, which involves the intervention of a third party (social letting agency or association approved by the State) between the owner and the tenant.

The tax reduction percentages are therefore as follows:

The owner is therefore free to carry out their own calculations, to determine their position in the grid and thus, which advantage they wish to benefit from.

The timeline

Please note that the previous scheme, Louer abordable, remains in force for any agreement submitted to Anah before 1st March 2022. Nevertheless, any tenancy signed after 1st January last year and subject to an Anah agreement submission after 28th February, is eligible.

The online platform for submitting applications has been open since 1st April 2022: any private landlord can take the step, provided they are ready to play the game.

Finally, the scheme is currently due to remain in force at least until the end of 2024. However, it may be reviewed or modified before then – follow our news!