Addressing the Financing Challenges of Co-Ownerships: The Need for a New Loan System

Between the maintenance of the park and the ambition of energy renovations, the annual volume of work to be carried out over the coming years in co-ownerships is estimated at 8.8 billion euros by the mission report relating to the financing of the work degraded co-ownerships led by Kosta Kastrinidis, director of loans at the Banque des Territoires (Caisse des Dépôts). This document (to be downloaded below), submitted to Patrice Vergriete, Minister for Housing on October 19, indicates that “the completion of the work programs requires meeting two conditions: the financing of the remainder payable by the co-owners and the pre-financing of public subsidies”. Without either, the files are blocked.

To finance the remainder of the work in co-ownerships, whether they are healthy or in difficulty, those involved in the field today favor collective loans with individual membership. However, 60% of co-ownerships – particularly those in difficulty or fragile – are not eligible for these loans. “The financing of work on co-ownerships in general is a niche market, invested by few players,” observes the mission.

Thus, “the range of loans available is complex and poorly suited to co-ownerships” and “the capacity of banking establishments already seems saturated”. As a result, “financing fragile and distressed co-ownerships can only be possible in a more open and mature market, in which certain players could review their profitability/risk ratio and be interested in covering, if not the co-ownerships in difficulty, at least fragile co-ownerships”.

A global, collective loan, backed by lots and inclusive

Faced with these obstacles, the report firstly recommends quickly applicable solutions, including the strengthening of the zero-rate pre-financing system for aid by the Procivis network, targeting it on co-ownerships monitored within the framework of the Co-ownership Initiatives plan (PIC ). For co-owners in difficulty – whose number is estimated at 114,000 – the establishment of a guarantee system is proposed to open up existing financing to them.

The mission also recommends the marketing of a new loan which could contribute to bringing together, in the long term, the conditions necessary for the massification of the co-ownership financing market by addressing all of them. This system would be global, collective, linked to lots and inclusive. It could be deployed by financial players with reduced entry and development costs, and cover different financing needs more completely. “The establishment of a double guarantee would remain essential for co-owners in difficulty to be eligible for this new loan,” notes the report.

In response to these proposals, the Ministry of Housing indicated that “the government will quickly study the creation of a new loan for co-owners, which would be offered by the banks to the co-owners’ unions”. “[Ce] loan and the establishment of a suitable guarantee system will complete the toolbox necessary to resolve situations that have been blocked for too long due to lack of financing”, estimates Patrice Vergriete. In addition, the mobilization of already existing financing tools will also be ” studied in the short term,” reports the ministry.