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0% mortgage | version française | |
Since 1995, the French Government has been helping first-time
buyers to cover part of the purchasing cost of their property by means
of a zero-interest mortgage program.
The program has gone through a number of changes.
The initial program ran from 1995 to 2005, and priority was then given
to new builds purchased by low-income borrowers (means tested). The
banks granting these special loans received, via SGFGAS, a subsidy from
the state to compensate for the interest payments foregone.. It also
covered existing properties. A further change was that the state
subsidy owed to the banks was paid in the form of a tax credit
(calculated by the SGFGAS) and no longer as a cash transfer.
On 1 January 2011 a Revamped 0% mortgage ("PTZ+") was launched. With
this version, the loan amounts were reviewed to align with market
reality. The PTZ+ has undergone several changes since 2011.
On all programs, the loan amount depends on a number of factors: type
of property (new build or existing, etc.), number of occupants and
location. When applying this latter parameter, the zone of location of
the property is taken into account (zone A, notably the Paris region;
B1; B2; C).
The PTZ+ program in 2011
PTZ+ loans approved during 2011 were not subject to means testing.
The household income did however have an impact on the repayment
schedule. The PTZ+ program which existed in 2011 could be used to
finance an existing property or a new build.
In the case of existing properties, .,the PTZ+ amount lent depended on
the energy consumption performance of the property, as measured by a
"DPE" test (Energy Performance Assessment) done when completing the
purchase, and classifying the property from "A" (best performance) to
"G" (worst performance). In the event of the property being sold by a
HLM organization (rent-controlled social housing), the PTZ+ loan
amounts were increased by 5%.
The PTZ+ program in 2012
The initial Finances Act for 2012 involved "reorienting" the PTZ+
for loans granted as of 1 January 2012.
Most of the properties financed were new builds, and energy-efficient
builds (with the "BBC" label") were eligible for larger loans. As of 1
June 2012, it was also possible to use the PTZ+ to finance the purchase
of a fully renovated property, as concept captured by the French VAT
regulations.
Of note is the specific case where an existing social housing property
("HLM") is sold to its tenants. In this case, a PTZ+ representing 10%
of the transaction amount can be granted, subject to the price of sale
of the property being reduced with respect to a valuation carried out
by the "services des domaines" (in charge of valuing and selling
property owned by the state of France).
Moreover, in 2012, applicants were once again means tested, and divided
into 6 "categories"; the length of the loan repayment schedule varied
according to the level of income of the applicant.
The PTZ+ program in 2013
As of 1 January 2013, the PTZ+ program was once again changed. It was still limited to new units, and in addition, these new builds had to respect a number of energy performance requirements (in general, the 2012 Thermal Regulation which had been optional until 2012 and became mandatory in 2013). Lastly, an additional feature of the 2013 PTZ+ program was the re-introduction of fully deferred payments for the first 2 categories of applicants as well as a further reduction of the resources ceiling of the applicants.
The PTZ+ program in 2014
A number of changes were made to the program during 2014, with
effect as of 1 October 2014.
Firstly, the zones used to identify the location of the property (A,
B1, B2 and C) were reviewed, and this led to a significant modification
of the population breakdown between these zones.
Secondly, the amounts eligible for the program were changed.
Lastly, the loan repayment schedules were modified.
The PTZ program in 2015
Apart from a name change (from PTZ+ to PTZ) and increasingly
exacting energy performance requirements, 2015 sees the extension of
the program to include the financing of existing properties, subject to
meeting requirements of renovation work and localisation.
With this remodeled PTZ, the goal is to help reinvigorate small villages and towns. This new version of the PTZ program is of potential interest in about 6000 municipalities in France.
Characteristics of the PTZ program
The program is applicable in mainland France as well as French
overseas territories.
The borrower pays neither interest nor administration costs to the
lender. The interest on the loan is paid by the State of France, in the
form of a tax credit granted to the lender.
The lender is however entitled to require the borrower to take out
insurance against invalidity and death. It may also require guarantees
(lien or guarantor), in which case these costs shall be paid by the
borrower.
If, as part of the same operation, another loan granted by the same
lender is a "PAS" ("Prêt d'accession sociale" - Affordable Housing
Loan), then the PTZ must (mandatory requirement) be guaranteed by FGAS.
The PTZ can be combined with any other loan, provided however that such
loans are mutually compatible.
The PTZ does not give a right per se to Personalized Housing Assistance
(APL), but this right may be given by an officially approved mortgage
(i.e. a loan with regulated interest rate, granted by financial
institutions which signed an agreement with the State of France) or a
PAS, contributing to the financing of the same operation.
Conditions for access to the PTZ
To be entitled to a PTZ loan, the borrower must purchase or build a
property to be occupied as his main residence (i.e., at least 8 months
of the year). Moreover, the borrower must not have been the owner of
his main residence for the 2 years preceding the PTZ loan offer. Note
however that exceptionally, the preceding rule (referred to as the
first-home ownership rule) shall not apply if the borrower is a
physically handicapped person or has been the victim of a natural
disaster.
Since 1 January 2012, applicants are means tested, and the applicant's
household income has an impact on the repayment schedule. When
means-testing an application submitted in the course of year "N", the
applicant's income taken into account is that shown on the income tax
assessment of each household member for the year "N-2"
In order to avoid possible "windfall" effects for a given year (leading
to a distorted loan application), it is required that applicants have a
certain minimum level of income, calculated with respect to the total
amount of the transaction (the applicant's income cannot be less than
the total amount of the operation divided by 9, since 1 January 2015).
The term "household" means all persons intended to occupy the financed
property on the date of issue of the loan offer.
Only one loan can be granted per household.
Qualifying transactions
The PTZ applied to new builds
The concept of "new build" is determined using the criterion of first
occupancy of the property.
As regards new builds, the property can be purchased from a developer,
or alternatively, the buyer can have a new property built. The program
can also be used to partially finance the purchase of the plot of land
on which the new property will be built.
As of 1 June 2012, it is also possible to use the PTZ to finance the
purchase of a fully renovated property, as concept also captured by the
French VAT regulations.
The PTZ applied to existing properties
Since 1 January 2015, 2 types of existing properties are eligible for
PTZ financing, to different extents:
Financial conditions
In principle, the PTZ loan amount cannot exceed 20% of the total
cost of the purchase operation, excluding taxes and solicitor's fees.
In practice, the amount depends on a number of factors:
| Number of persons |
New Proprerty | Existing Property | ||||||
| zone A | zone B1 | zone B2 | zone C | zone A | zone B1 | zone B2 | zone C | |
| 1 | 156 000 € | 117 000 € | 86 000 € | 79 000 € | 124 000 € | 93 000 € | 86 000 € | 79 000 € |
| 2 | 218 000 € | 164 000 € | 120 000 € | 111 000 € | 174 000 € | 130 000 € | 120 000 € | 111 000 € |
| 3 | 265 000 € | 199 000 € | 146 000 € | 134 000 € | 211 000 € | 158 000 € | 146 000 € | 134 000 € |
| 4 | 312 000 € | 234 000 € | 172 000 € | 158 000 € | 248 000 € | 186 000 € | 172 000 € | 158 000 € |
| 5 et + | 359 000 € | 269 000 € | 198 000 € | 182 000 € | 285 000 € | 214 000 € | 198 000 € | 182 000 € |
| Number of occupants |
zone A | zone B1 | zone B2 | zone C |
| 1 | 150 000 € | 135 000 € | 110 000 € | 100 000 € |
| 2 | 210 000 € | 189 000 € | 154 000 € | 140 000 € |
| 3 | 255 000 € | 230 000 € | 187 000 € | 170 000 € |
| 4 | 300 000 € | 270 000 € | 220 000 € | 200 000 € |
| 5 et + | 345 000 € | 311 000 € | 253 000 € | 230 000 € |
| |
zone A | zone B1 | zone B2 | zone C |
| New and
existing properties subject to location (i.e. villages and small towns) and to carrying out renovation work corresponding to a certain minimum amount of the total purchase |
26% | 26% | 21% | 18% |
| Existing properties (sale of social housing to its current occupants) |
10% | |||
In practice, a PTZ loan amount must always equal the smaller of the following sums:
The transaction amount multiplied by the transaction cost (excluding lawyer's fees) limited if appropriate, with said limit itself varying according to the composition of the household, the geographical location of the property; or
100% of the total amount of the other loans of a duration of at least 2 years which are used to finance the transaction.
A PTZ mortgage is repaid over a shorter or longer period (i.e. the
repayment schedule) depending on the reference taxable income of the
household and on the household composition.
Specifically, a scale has been devised consisting in 5 categories
(since 1 January 2013) depending on income.
| income category | zone A | zone B1 | zone B2 | zone C | deferred capital | duration | |
| period 1 |
period 2 |
||||||
| 1 | ≤ 20 000 € | ≤ 18 000 € | ≤ 15 000 € | ≤ 13 000 € | 100% |
14 years |
11 years |
| 2 | ≤ 22 000 € | ≤ 19 500 € | ≤ 16 500 € | ≤ 14 000 € | 100% |
11 years | 14 years |
| 3 | ≤ 25 000 € | ≤ 21 500 € | ≤ 18 000 € | ≤ 15 000 € | 100% |
8 years | 14 years |
| 4 | ≤ 28 000 € | ≤ 23 500 € | ≤ 20 000 € | ≤ 18 500 € | 0% |
16 years | - |
| 5 | ≤ 36 000 € | ≤ 26 000 € | ≤ 24 000 € | ≤ 22 000 € | 0% |
12 years | - |
Applicants in the 2 lowest-income categories are entitled to the
longest repayment durations (up to 25 years) as well as totally
deferred payment (of 14 years for category 1 and 11 years for category
2). Applicants with higher income levels have 12 years to reimburse the
loan.
The household composition is also taken into account in that the
applicable category depends on the household income divided by a
coefficient linked to the number of household members (1.4 for 2
members, 1.7 for 3 members, 2 for 4 members and 0.3 for each additional member up to 8).
On request from the borrower, the lending institution can reduce the
loan amount and duration.
The State has made SGFGAS responsible for determining the factors used
to calculate the tax credit relative to loans granted by lenders, doing
so in accordance with the provisions of articles R.31-10-1 and
following of the Building and Housing Code and for transferring the
results of these calculations to the lender and the tax authorities.
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