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Home Savings Program | version française |
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The Home Savings Program ("épargne-logement"),
created in 1965, consists in 2 phases. On completion of an initial
savings phase, during which a saver makes deposits into his Home
Savings Account ("compte d'épargne-logement" or
"CEL") or his Home Savings Plan ("prêt
d'épargne-logement" or "PEL"), that same
saver is then entitled to apply for a special regulated housing loan
("prêt d'épargne-logement"). Such loans
enjoy advantageous interest rates set by contract and are granted to
individuals in order to finance the purchase of a property and/or
carry out renovation work on a property. In some cases, the State of
France supplements the loan with a special Top-Up paid by the French
government ("prime d'État"). The saver must
commit to use the saved funds to finance the property for which the
loan is granted.
The Home Savings Account (CEL) is flexible : the saver is free to
deposit and withdraw funds, subject however to respecting the minimum
amount fixed by government order. A CEL can be kept open and used as a
savings vehicle for as long as the saver wishes.
The Home Savings Plan (PEL) offers a better saving rate and a higher
deposit ceiling, but is less flexible : the saver commits to
depositing a certain amount of money on a regular basis and this money
remains blocked on the account for a certain time. Another difference,
with respect to the CEL, is that a PEL has a limited lifetime.
Only individuals (i.e. no legal persons) are entitled to open a
CEL/PEL. Underage children are entitled to have a CEL/PEL, in which
case the payments are made by the child's parents (or a third
party) with the saved funds accruing to the child.
A given individual can only have one single PEL or CEL, but a given
person can have both a PEL and a CEL. No requirements as regards
nationality or place of residence apply.
The Home Savings regime is applicable in mainland France and in
French overseas territories, including Mayotte, Saint Pierre and
Miquelon, New Caledonia and French Polynesia.
Since 1 January 2014, the regulatory monitoring and collection of
statistics in relation to the PEL/CEL, as well as the verification of
operations related to this program, have been entrusted to SGFGAS.
A Home Savings Book can be dematerialized; however, a written contract
must be signed by a representative of the banking establishment where
the funds will be deposited and by the future saver, specifying the
rights and obligations of both parties. This contract must be kept by
the banking establishment.
Deposits
In order to make sure that the program fulfills its stated purpose as
a vehicle to ensure regular savings, both the CEL and the PEL impose a
number of rules as regards the initial deposit and subsequent
deposits.
A CEL can be kept open as long as the saver wishes, and funds can be
withdrawn from a CEL, subject however to keeping at least €300 on
the account.
A PEL has a duration of between 4 to 10 year. Once this time has
expired, the saver can no longer deposit funds on the PEL, but funds
already deposited continue to be remunerated at the contractual agreed
rate for an additional period of 5 years.
Duration
A CEL can be kept open as long as the saver wishes, and funds can be
withdrawn from a CEL, subject however to keeping at least €300 on
the account.
A PEL has a duration of between 4 to 10 year. Once this time has
expired, the saver can no longer deposit funds on the PEL, but funds
already deposited continue to be remunerated at the contractual agreed
rate for an additional period of 5 years.
Interest rate paid on funds deposited
The interest rate paid for the CEL automatically tracks the interest
rate paid to holders for the "Livret A" savings book, doing
so as follows: excluding the Top-Up paid by the State, the rate of
interest paid on a CEL is equal to 66% of the rate paid for the
"Livret A" savings book, rounded up to the nearest quarter
point (or failing this, to the next highest quarter-point), which has
been 0.75% since 1 August 2013. Taxation is reduced : hat social
contributions are deducted on interest generated, but otherwise the
interest is income tax free.
In the case of a PEL, interest is generated at the rate set on the
date of signature of the subscription contract. This rate remains
unchanged for the entire duration of the plan. Since 2011, this rate
was 2.5% per year. It is 2% per year since 1 February 2015.
On completion of the initial phase (i.e., saving the funds), the
holder of a CEL or a PEL is entitled to a property loan, along with a
special Top-Up paid by the French government.
The rules for the Government Top-Up as well as properties eligible
for the program have evolved over time, most recently in 2011 for Home
Savings Plans and Accounts opened as of 1 March 2011. The following
sections concern only such operations.
Eligible property: the property purchased must be a
main residence (new or existing property, purchase and/or renovation
works). The loan can however be used to purchase shares issued by
property investment companies ("SCPI").
Loan amount: The loan granted on the basis of a
CEL/PEL depends on the age of the Account/Plan, as well as on the
interest rates. Specifically, the loan amount and duration are
calculated in such a way that the total interest amounts to be paid
back by the borrower are equal to the total interest generated (via
the CEL or PEL) and used to calculate the loan, the preceding
multiplied by an interest-conversion coefficient at least equal to 1.
As regards the CEL, the maximum interest-conversion coefficient is 1.5
in the case of standard property loans, and 1.0 in the case of loans
intended to purchase shares issued by property investment companies.
As regards the PEL, the maximum interest-conversion coefficient is 2.5
for standard property loans, and 1.5 in the case of loans intended to
purchase shares issued by property investment companies.
The maximum loan amount to which the borrower is entitled is
€23,000 in the case of a CEL, and €92,000 in the case of a
PEL. If a given person has a CEL and a PEL, the maximum loan amount
remains at €92,000. These amounts are set with respect to the
holder of the Account/Plan, which means that, in most cases, a married
couple is entitled to a loan of up to €184,000.
Loan terms: the loan duration is between 2 and 15
years.
The rate of interest depends on the rate used to calculate interest
generated during the saving phase, to which a margin is added, as
follows:
Top-Up paid by the French Government to savers
If a PEL or CEL saver closes his account (having respected the
applicable rules) or takes out a loan based on his PEL/CEL, he
receives a special Top-Up from the French government. The amount of
this Top-Up depends on the amount saved, and is calculated using rules
which have varied over time. The Top-Up is paid by an institution
chosen by the government (currently the Crédit Foncier de
France).
Determining the Top-Up for a CEL: the Top-Up is only paid if the
holder of the CEL actually requests a Home Savings Loan. The Top-Up
depends on the interest accrued during the lifetime of the CEL. Thus,
for Top-Up entitlements generated as of 16 February 1994, the amount
of the Top-Up is equal to a fraction of the interest accrued on the
date on which the loan is requested and taken into account to
calculate this loan. The exact value of this fraction is determined by
means of a ministerial order, in a uniform manner for all CEL
accounts, regardless of when they were opened. Specifically, this
fraction is 5/9 for interest accrued between 16 February 1994 and 15
June 1998, and this fraction is 1/2 for interest accrued as of 16 June
1998. The maximum Top-Up is €1144 per loan operation.
Determining the Top-Up for a PEL: the holder of the PEL is entitled
to a Top-Up paid by the State, assuming that the saver respected the
clauses set forth in the savings contract. The conditions under which
this Top-Up is paid depend on the opening date of the Home Savings
Plan, as follows:
For PEL plans opened from 1 March 2011 to 31 January 2015, the Top-Up
is equal to 2/5 of the accrued interest, up to a maximum of €1525
(whereby this can be adjusted upwards depending on the family
dependency situation).
For PEL plans opened as of 1 February 2015, the Top-Up is equal to half
of the accrued interest, up to a maximum of €1525 (whereby this can be
adjusted upwards depending on the family dependency situation).