Affordable housing reform: significant progress and persisting limitations

Since it came into force, the Law of 7 August 2023 on affordable housing has already been amended on several occasions. The most recent amendment results from the Law of 7 September 2026, which came into force on 2 October 2026 (the ‘Law’). This new legislative measure introduces several adjustments that had been long awaited by stakeholders in the sector, whilst leaving certain significant questions unanswered.

I. The main contributions of the reform

1. Simplified procedures

• The public-interest status attached to the provision of affordable housing now streamlines the administrative procedures required to carry out projects.
• The removal of the deadline imposed on social housing developers for submitting their applications for financial support gives them greater flexibility in structuring their operations.

2. Optimised land use

• The Law has introduced or strengthened several forms of financial support for certain projects. The maximum amounts of eligible costs have thus been increased by 15 per cent for the development and remediation of contaminated sites, and by 30 per cent for the energy-efficient refurbishment and renovation of existing housing.
• The public developers may now allocate another equivalent plot of land to affordable housing, which promotes a more coherent and sustainable use of land.

3. Expanded financial contribution of the State

• The State’s financial contribution now covers certain indirect costs borne by the social housing developer, in particular the administrative, commercial, regulatory and financial tasks associated with the development of the project. 
• The eligible costs have been extended to include certain specifically listed items, such as ancillary spaces, centralised car parks, kitchen units and certain items of initial furnishings for targeted categories.
• The return on invested capital has been extended to the local authority sector, with retroactive effect from 1 October 2023. 
• The maximum duration of financial support for loan interest payments has been extended from 24 months to 36 months, to better align with the duration of construction projects. 
• The geographical location has also become a criterion for determining financial support. The division of the country into land-price zones (segmentation géographique) should thus enable the cost of land to be taken into account more precisely when calculating eligible amounts, particularly for the acquisition or disposal of land and long-term leasehold fees.
• The flat-rate fee for management and the coverage of operating costs is now calculated per housing or accommodation unit, in order to better reflect the nature of the properties concerned, particularly where the properties are subdivided into several private units within the same building, as is the case with shared accommodation. 
• The flat-rate management fee charged by social landlords has been extended to certain properties intended for students and employees.

4. A more defined legal framework for affordable tenancies 

• The rent charged by the social housing developer may not exceed the amount of the public service compensation.
• The Law now requires the tenant to provide a rent guarantee, regardless of the amount of the rent. This guarantee may not exceed €3,000 and the tenant has two years to provide it. 
• The social landlord must provide accommodation suited to the composition of the household (couple with or without children, single person, etc.) and, within three years, offer rehousing when the accommodation is no longer suited to that composition.  
• The Law has introduced a new ground for termination as of right, subject to fifteen (15) days’ notice, for serious and legitimate reasons that are set out exhaustively (non-payment of rent, failure to use the premises for their intended purpose, subletting or transferring to a third party, etc.).

5. Clearer allocation criteria

• The reform has introduced two new open quotas (contingents libres), which allow social landlords, within the applicable percentage limit, to take into account only the household’s income and the suitability of the accommodation for that household, to the exclusion of any other allocation criteria. From now on, there is an additional 10 per cent discretionary quota for social landlords with more than 100 homes and a further 50 per cent quota where the social landlord has more than 750 accommodations. 
• Single-parent households are now recognised as a particular situation falling under a specific category.
• The Law expressly requires social housing landlords to allocate housing without discrimination.

6. Incentivised private sector stakeholders

• Private landlords who voluntarily bring their existing properties under the affordable housing scheme are entitled to public service compensation equal to 25 per cent of the capital invested.
• This compensation is increased to 100 per cent of the capital invested in the construction of new projects, the renovation or conversion of existing homes, and properties purchased under an off-plan sale (VEFA).

II. The reform’s persisting limitations 

The reform usefully strengthens the legal framework, but certain developments nevertheless call for a measured interpretation.

1. More flexible criteria for the allocation of social housing

• Whilst the use of open quotas offers greater flexibility, it may also, under certain circumstances, diminish the priority normally granted to the most vulnerable applicants based on socio-economic allocation criteria.
• In particular, for housing falling under the open quota, the landlord may disregard certain statutory socio-economic allocation criteria that are nonetheless essential, such as the unfitness for habitation of the occupied property, the existence of a notice terminating the right of occupation, or single-parent status. This can thus disrupt the order of priority among prospective tenants, to the detriment of the most vulnerable.

2. Still limited integration of private stakeholders

• The public-private partnership model introduced by the Law remains, at this stage, relatively unbalanced and insufficiently open to certain developers. 
• The Law does not yet provide for greater integration of private operators into the letting and sale of affordable housing. Their role remains, for the most part, that of quasi-public operators or land portfolio holders, whereas, under a more ambitious approach, they could become genuine stakeholders in the scheme. 
• In practice, these partners also remain bound by competitive tendering rules, which limits the scope of the scheme.

3. A partially inadequate legal framework for tenancy agreements 

• The uniform cap on the rent guarantee, which does not depend on the amount of rent, creates disparities between tenants.
• Furthermore, even where there are legally valid grounds for termination of the tenancy, the tenant’s continued occupation of the premises without legal right or title requires, in practice, the initiation of legal proceedings, with the associated delays and costs.
• Certain features of the affordable tenancy appear difficult to reconcile with the open-ended tenancy regime, which leaves a certain mismatch between the contractual instrument and the objectives pursued.

4. State financial contribution with lower caps

• The Law has broadened the scope of costs eligible for financial contribution by the State, but this comes, in several cases, with significantly lower applicable caps. Whilst more categories of costs may be taken into account, the maximum amounts that may be covered are considerably reduced in certain cases, thereby diminishing the actual impact of the measure.
• For example, in the context of a land sale, the total eligible costs for the category of undeveloped land and for special and standard site development has fallen from €1,886 per square meter of gross floor area intended for housing to €105.
• Similarly, for the construction costs of new projects, the costs of renovation and initial conversion of existing properties, and the costs of buildings acquired as part of an off-plan sale, the cap has been reduced from €3,100 to €355 per square meter of gross floor area intended for housing.
• Furthermore, for the provision of public parking spaces in a centralised car park facility, the total eligible costs have been reduced from €30,000 to €3,850 per space. 
• The standardisation of public service compensation granted to private owners of existing housing at 25 per cent of the capital invested – regardless of any previous financial support – may seem to offer little incentive.

The Law therefore represents real progress, but it is still only a partial step forward. It strengthens the existing framework without fully addressing its weaknesses.

Our real estate team supports private and public developers, social housing landlords and local authorities in structuring affordable housing projects. Are you leading an affordable housing project, or do you have questions about the role of private developers within this scheme? Contact our team for strategic and operational support tailored to your project.