Moving Towards Long-Term Housing Affordability in France

Moving Towards Long-Term Housing Affordability in France

by | Feb 4, 2019 | The Urban Media Lab

The Launch of the National OFS Network and the Cosmopole Project in Lille

On 15 and 16 November 2018 Sciences Po Lille hosted an event to celebrate the launch of the French National Network of the Organismes de Foncier Solidaire (OFS) and the signature of the first baux réel solidaire (BRS) between the recently established OFS Metropole Lilloise (OFSML) and the future residents of the project Cosmopole. The celebration occurred in the presence of the French Ministry for Housing and Town Planning and was met with great enthusiasm by a large audience of representatives of housing cooperatives and social housing associations (HLM), regional and municipal housing delegates, and the presidents of the seventeen OFS federated in the Network. The event also brought together property developers, representatives of financial institutions, such as the Crédit Foncier and the Caisse de Depot, and prominent figures of the French Conseil Supérieur du Notariat.

                        Fig 1: Logo of the event, Métropole de Lille

                        Fig 1: Logo of the event Ó Métropole de Lille

The reason for this widespread interest and support by such a diverse range of French housing stakeholders lies in the potentially far-reaching beneficial effects that the OFS-BRS scheme may have on the French housing market in terms of increasing its stock of permanently affordable housing, a mission which is altogether similar to that of Community Land Trusts in the United States. We have already described here the origins and the main features of the CLT model and have presented here the practical implementation of the model in the case of Dudley Street Neighbourhood Initiative, where it has resulted in fostering long-term housing affordability and revitalising the neighbourhood. We have also observed here that the concept and features characterising the CLT model did not remain confined to the United States but spread to several countries in Europe, including the United Kingdom, Belgium, and France, urging serious reflections on the most appropriate legal tools to adapt it in the different legal systems. In France, growing concerns over long-term housing affordability have hit the political and legislative agenda during the past five years and resulted in the legal introduction of the OFS-BRS scheme, whose functioning is inspired by the CLT model in the United States. Understanding how the OFS and BRS work together in practice was the main focus of the several workshops held during the event in Lille.

The first element of the scheme, the Organisme de foncier solidaires (OFS), was introduced by the Loi ALUR in 2014. Article L329-1, Code de l’Urbanisme describes the OFS as non-profit organisms totally or partially devoted to the acquisition and the management of improved or unimproved land, and whose main goal – as part of the broader housing promotion strategy set out in article L301-1 of the Code de l’Urbanisme – is to provide affordable homes to be rented out or sold to income-qualified persons. Two workshops during the event focused on the most appropriate legal formats and the procedure for the implementation of OFS. It emerged that the OFS may be set up by local and regional public authorities or by private housing stakeholders as non-profit entities, such as fondations reconnues d’utilité publique, sociétés anonymes de droit privé, groupements d’intérêt public, or as one of the legal entities mentioned in articles L411-2 and L481-1 of the Code de la Construction et de l’Habitation (CCH), and notably sociétés d’économie mixte de construction et de gestion de logements sociaux or organismes HLM.Different legal formats may better work in different local contexts and the choice may depend on the characteristics of the particular housing project(s) envisaged and on the nature and number of the stakeholders involved. However, identifiable common traits of the OFS are i) their non-profit nature and ii) their capacity to permanently devote land to affordable housing purposes. It should be also stressed that the OFS does not represent a new legal format, but a status recognised to an already existing legal entity. Indeed, according to articles R329-6 to R329-10 of the Code de l’Urbanisme, the OFS shall be approved by the local Prefect on behalf of the State after verifying that all the requirements established by the law are complied with. And the Prefect can at any time revoke or suspend the OFS status if found that the OFS no longer respects the conditions prescribed by the law or where it has contravened its main obligations.

The event in Lille also represented the opportunity to launch the Réseau National des OFS: « Foncier Solidaire – France », which takes inspiration from the UK and the United States National CLT Networks. Seventeen OFS recently set up or under creation have gathered in the Network with a view to support and promote the realisation of OFS-BRS projects. According to its Charter, the Network aims to i) sharing experiences and promote collaboration throughout the country, ii) put forward proposals to the Government and to other housing stakeholders, iii) facilitate the connection with new different forms of housing (eg habitat participatif), and iv) ensure large-scale communication to the public and foster the knowledge of the model. The Network may also involve other housing stakeholders, which are not OFS, such as local authorities, social housing promoters, financial institutions. In particular, the Fédération des Coopératives HLM and the National Association of the Etablissements Publics Fonciers Locaux have already decided to join this initiative.

How do the OFS work in practice? Further workshops during the two-day event focused on the second element of the BRS-OFS scheme, the bail réel solidaire (BRS), that is the legal mechanism through which the OFS can realise housing affordability goals. As para 3 of article L329-1 clarifies, the OFS-BRS scheme relies on a split in the ownership of land and improvements: the OFS are set to retain ownership of the land in perpetuity while homes built or renovated on the land are sold or rented out to income-eligible purchasers. In this way, the price for purchasing or renting homes is kept affordable to the extent that the cost of land is borne by the OFS. To this purpose, a major legislative intervention in July 2016 devised a new type of contract for the lease of land, the BRS, specifically tailored to be used by the OFS in furtherance of their mission. The BRS is regulated by articles L255-1 to L. 255-19 of the Code de la construction et de l’habitation (CCH) and by the decree of the Conseil d’Etat n° 2017-1038. The BRS is modelled after the structure of pre-existing types of ‘long leases’, notably the emphyteutic and the building lease, and allows to separate interests in the property for up to 99 years. However, some specific features make it the perfect instrument for the OFS to achieve housing affordability goals. In particular, the law precisely sets income-eligibility criteria for prospective occupants, strictly regulates their ability to transfer their rights over OFS homes by way of sale or by will, and grants the OFS a right of pre-emption in any case of resale; moreover, in case of transfer of OFS homes, the law establishes that the price must comply with a fixed formula which aims to limit speculation.

Thanks to this enabling legislative framework and to the support of a vast range of housing stakeholders, Lille Métropole has set up its OFS in February 2017 (OFSML). The OFSML has been set up together with the Métropole Européenne de Lille (MEL), the Fondation de Lille, and the federation of real estate developers Nord Pas-de-Calais; other organisms, notably Action Logement and the regional HLM association, will be soon integrated in the board of directors of the OFSML. In December 2017 the OFSML launched its first project, Cosmopole, which offers a good practical illustration of how the OFS-BRS scheme works. The different stages of the realisation of this project were presented during one of the workshops and a visit to the site was arranged during the event.

Fig.2: Author’s picture of the Cosmopole site
Fig.3: Author’s picture of Cosmopole’s blueprint

The Cosmopole project is located on the site of former university buildings in the city centre; the buildings were previously owned by the municipality of Lille and then bought by the OFSML thanks to a financial loan granted by the Caisse de Dépôt. For the realisation of the project, the OFSML has worked in partnership with a real estate developer (selected after a call for projects). The OFSML first sold the whole site to the developer and, subsequently, the developer sold back to the OFSML the land on which the 15 BRS homes were to be built, against payment of a symbolic price[1]. At this point, the developer entered into a BRS contract (called BRS-Initial) with the OFSML and acquired temporary ownership of future homes against payment of a peppercorn ground rent; at the same time, the developer undertook the obligation to build the homes and was granted the right to sell them according to the criteria already defined by the OFSML.

Households wanting to buy one of the homes have to i) comply with the eligibility criteria and be approved by the OFSML; ii) enter into a contract with the developer (Vente en état futur d’achèvement, or VEFA) where all the terms (eg price, income ceilings) are already set by the OFSML; and iii) simultaneously enter into a 99-year BRS contract with the OFSML, called BRS-Utilisateur, against payment of a ground rent (eg 1euro/m2/month). In this way, the households acquire ownership of the homes and become leaseholders of the OFSML land upon which they are located. At the same time, as the homes are sold by the developer the rights conferred to it via the BRS-Initial are withdrawn and, once the last home is sold, the contract expires. And now, if the BRS households ever want to sell their homes, they are bound by precise terms (set by the law and by the OFSML itself) concerning the resale price and their rights; equally, prospective purchasers will need to meet income eligibility criteria and be approved by the OFSML in advance. However, new purchasers will not have to enter into a new BRS with the OFSML, as they will substitute the former occupants and the original BRS-utilisateur will be automatically ‘recharged’ for another period of 99 years.

The Cosmopole project is in the latest stages of its completion: the first contracts BRS-utilisateur were signed between the OFSML and the purchasers in November 2018. According to the CEREMA’s report, the Cosmopole project is expected to be completed in early 2019, while another project of the OFSML, Bourse du Travail, is under construction and homes are expected to be ready in 2020. But the practical implementation of the OFS-BRS scheme is not confined to Lille. As highlighted in other CEREMA’s reports, several projects have been launched throughout the country by the OFS Rennes Métropoles, the OFS Avignon, the Coopérative Foncière Francilienne, the Foncière Haute-Savoie, and by the COLs Foncier Solidaire in Biarritz and in L’Espelette. Although each of these projects is supported by several different housing stakeholders and may have slightly different characteristics and targets, they all rely on the OFS-BRS scheme and pursue the goal of increasing the stock of permanently affordable housing.

Fabiana Bettini

Hulme Postdoctoral Fellow in Land Law, University of Oxford

[1] It should be mentioned that the whole site measures 20,000 m2 and will host 210 housing units. Along with the 15 units available for purchase by low-income households via the BRS scheme, the site will feature 49 social housing rental units, 9 housing units for moderate-income households, and 54 units under the pret locatif social-usufruit locatif social schemes (PLS-ULS). The site will also host 214 parking lots, a hotel, an art gallery, and the English Cultural Centre.

The Rise of Community Land Trust in Europe

The Rise of Community Land Trust in Europe

by | Sep 6, 2017 | The Urban Media Lab

Granby Community Land Trust (Credits © Ronnie Hughes)

In most European countries long-term housing affordability and neighbourhood revitalisation are emerging as crucial concerns in the current housing political and policy agenda. Local authorities in several European cities have started to recognise the importance of supporting and funding collaborative housing projects as a strategy to meet the unsatisfied demand of social housing accommodation and to reinforce community empowerment. In particular, the Community Land Trust model has started to draw the attention of local and national authorities, for it is capable of both ensuring housing affordability and promoting urban regeneration.

As already described in a previous article, Community Land Trust is a membership-based, non-profit organisation chartered to hold and manage land in trust for the benefit of a given community. The main feature of the CLT model is the possibility to realise a split in the ownership of land and improvements. The CLT retains title to the land and permanently removes it from the market, while entering into long-term agreements with prospective low- or moderate-income residents, who become the owners of the improvements. In addition, the existence of a tripartite board of directors, which includes representatives of residents, members of the CLT community, and members of the public, ensure a democratic governance of the CLT.

In the United States, CLTs have a long history. One of the oldest and most acclaimed CLT in the US, the Dudley Street Neighborhood Initiative in Boston, dates back to 1984, and hundreds of others have been built throughout the country since then. Recently, the New York City Department of Housing Preservation and Development (HPD) has issued a Request for Expressions of Interest (RFEI) to identify qualified groups who are interested in forming a CLT, thus showing an increased attention by local policymakers.

In Europe, the CLT model has already gained recognition in several countries, both at a grassroots and legal level, often in collaboration with local or central governments. This is the case for England and Wales, where the Housing & Regeneration Act 2008 has legally recognised CLT and defined it as a corporate body whose main goal is to acquire and manage land for the benefit of the local community[1]. Following the formal introduction of CLT into the English legal landscape, a National CLT Network was established in 2010 and it then became an officially registered charity in 2014. The Network “provides funding, resources, training and advice for CLTs and works with Government, local authorities, lenders and funders to establish the best conditions for CLTs to grow and flourish”[2]. According to the National CLT Network, there are almost 70 CLTs in England and Wales, although the level of accomplishment of the projects varies substantially. Among them, the London CLT dates back to 2007 and is probably the most renowned and iconic example of CLT in England.

CLT projects in England and Wales (Credit © National CLT Network)

Although the implementation of the CLT model is recent, a supportive political agenda, the lobbying by the CLT network, and a property law tradition that is common to the UK and the US, have helped it to take roots and flourish throughout England and Wales.

By contrast, the implementation of the CLT model in civil law countries has been less straightforward. Despite a considerable amount of support from grassroots movements, a different conception of property law and the consequent absence of proper legal structures for CLT have slowed down its process of recognition. Among civil law countries, Belgium has offered the first example of implementation of a CLT in continental Europe. The Ecluse project in Brussels, inaugurated in September 2015, is the outcome of an intense collaboration and exchange between local associations, citizens, and the Brussels government. In particular, the strong support by the Brussels government and the legal recognition of the CLT Bruxelles (CLTB) in the Brussels Housing Code in 2012 (as a non-profit association and a public utility foundation) represented the crucial stage for the implementation of the CLT model in the region[3]. In particular, in the framework of the Alliance Habitat regional governmental plan for increasing the social housing stock, the Brussels government have allocated 2 million euros per year to CLTB for the 2014-2017 period. Actually, in addition to L’Ecluse project, CLTB has planned to complete three other projects (Arc-en-Ciel, Le Nid, and Lumière du Nord) by the end of 2018, while three more have just got started in the past few years (Rue Liedts, Transvaal, and Tivoli). Three other projects are currently under study and evaluation.

CLT projects in Brussels (Credits © Community Land Trust Bruxelles – Brussel)

In the wake of the successful implementation of CLTs in England and Brussels, the interest for the CLT model has risen in France. At the end of 2013, the association Community Land Trust France “Pour un foncier solidaire” was created to promote the principles and values of CLT, and to adapt them to the French context, while at the same time increasing awareness among groups and landowners[4]. Since then, CLT France has regularly taken part in the working group headed by the Ministère du logement et de l’habitat, and contributed to the adoption of new legal structures to implement CLT in France.

(Credits © Community Land Trust France – Pour un foncier solidaire)

On the basis of the results of this consultation phase, the Loi ALUR 2014 introduced the Organismes de foncier solidaire (OFS) in the Code de l’urbanisme[5]. OFS are non-profit organisms whose activity is totally or partially devoted to the acquisition and management of improved or unimproved building land, and whose main goal is to provide affordable collective housing and related services to be rented out or sold to income-qualified people. Since the main feature of the OFS, which are based on the CLT model, is a split in the ownership of land and improvements, the adoption of a new type of lease was supported by CLTF, and finally approved by an ordonnance in July 2016[6]. The legal discipline of the bail reel solidaire (BRS), which is meant to be primarily used by the OFS, is now included in the Code de la construction et de l’habitation (CCH)[7]. Very recently, a series of decrees have provided a more detailed regulatory framework for the practical operation of OFS[8] and BRS[9], so removing the remaining obstacles to the implementation of CLT in France. Following these substantial changes in the French legal landscape, CLT projects are likely to flourish in the coming years.

 

References

[1] More precisely, CLT is defined in Part 2, Chapter 1 of the Housing and Regeneration Act 2008 (c. 17).

[2] http://www.communitylandtrusts.org.uk/about-the-network/what-we-do.

[3] https://communitylandtrust.wordpress.com/notre-histoire/

[4] Cfr the press release issued after the association was created, available at http://www.communitylandtrust.fr/clt-en-france–c1/creation-de-l-association-clt-france–66

[5] Cfr article L. 329-1, Code de l’urbanisme.

[6] Ordonnance n° 2016-985 du 20 juillet 2016, art 1er-2°.

[7] CCH, articles L. 255-1 to L. 255-19.

[8] Cfr Décret n°2016-1215 du 12 septembre 2016 and décret n°2017-1037 du 10 mai 2017.

[9] Cfr Décret n° 2017-1038 du 10 mai 2017.

 

 

Nell’ultimo decennio il modello americano del Community Land Trust ha attecchito e si è diffuso in numerosi paesi europei grazie all’introduzione di nuovi strumenti giuridici, al supporto delle associazioni CLT e al finanziamento dei governi locali e centrali. In Inghilterra e in Galles, dove il CLT è stato introdotto nell’Housing and Regeneration Act 2008, si contano circa 70 progetti coordinati da un forte network nazionale. In Belgio, nella regione di Bruxelles, l’associazione CLT Bruxelles ha ottenuto cospicui finanziamenti dal governo locale e può vantare la realizzazione del primo CLT dell’Europa continentale, oltre a una decina di ulteriori progetti in fase di completamento e di studio. In Francia, grazie alle pressioni esercitate dall’associazione CLT France, una serie di importanti riforme ha recentemente introdotto nuovi strumenti giuridici, quali organismes de foncier solidaire e bail réel solidaire, che mirano a facilitare l’introduzione del modello.