Caisse des Dépôts et Consignations – Turning household savings into social housing
CDC centralizes government-backed savings accounts called ‘Livret A’ and makes a proportion of these available to fund loans for social housing provision. Livret A savings accounts are available in all French banks; they are popular because they offer an attractive interest rate, tax-free, and state guaranteed. There are around 50 million such accounts in France, with a current deposit cap of EUR 22,950. At the end of 2020, French households had EUR 411 billion in savings in CDC-managed savings accounts.
Context
Some 65 per cent of deposits from Livret A savings accounts are centralized in CDC and used to fund social housing construction and refurbishment loans. These loans are provided at slightly above cost, that is, above the Livret A interest rate, the average of the previous year’s consumer price index (CPI) inflation and the Euribor & Eonia rates – currently at 0.5 per cent. The result is that interest rates are generally below those available from commercial lenders. Critically CDC social housing loans are also provided for long durations, which helps spread the costs of social housing provision over time. Loans for social housing refurbishment and modernization are available for 15-30 years, loans for social housing construction available for 40 years, and for 50 years in 20 per cent of cases.
Actors involved
Caisse des Dépôts et Consignations (CDC)
Results
CDC provided around EUR 10 billion in new financing for development or acquisition of new social housing units in 2019, which helped add 78,740 dwellings to the French social stock. It also provided EUR 1.9 billion to help finance renovation of social housing units. For 2020-2022, the objective of CBC is to finance the delivery of 110,000 new social housing units per year plus renovation of a further 125,000 social dwellings.
Why it works
One of the strongest features of the CDC model is that it is not “pro-cyclical” in its investment pattern. This means that even when an economy goes into economic decline or recession, like during the pandemic, CDC can maintain or even increase its investments. Savings by French households into their CDC-linked accounts actually increased in 2020, reaching an all-time high of EUR 411 billion. So, recession or not, money can support jobs in the construction sector and thereby the wider economy. It also means that those who have lost jobs or experienced income drop can be quickly helped to find suitable housing.[1] This is evidenced by the annual production of new social housing units in France actually increasing after the global financial crisis of 2007/08, supported by increased household saving in CDC-linked savings schemes[2].
Scale
National
More information
[1] Claire Levy-Vroelant, Jean-Pierre Schaefer and Christian Tutin, “Social Housing in France”, in Social Housing in Europe, Kathleen Scanlon, Christine Whitehead and Melissa Fernandez Arrigoitia, eds. (London, Wiley Blackwell, 2014), pp. 123–142. Available at https://onlinelibrary.wiley.com/doi/10.1002/9781118412367.ch8.
[1] For a review of CDC scheme (in English) from 2021, see https://www.housingeurope.eu/blog-1523/household-savings—a-force-for-a-renewed-and-solidaire-europe-of-housing-opportunity.
[2] Jean-Pierre Schaefer, “The French Social Housing Sector at the Crossroads of Budgetary Constraints and Social Missions”, Critical Housing Analysis, vol. 4, Issue 2 (2017), pp. 29-38. Available at http://www.housing-critical.com/home-page-1/the-french-social-housing-sector-at-the-crossro.
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