On 12 February 2017, Vaud constituents accepted, with a 55.5% majority vote, the new Cantonal Act on preserving and promoting rental stock (LPPPL or L3PL - Loi cantonale sur la préservation et la promotion du parc locatif). This legal text introduces a set of measures designed to preserve rental accommodation in the Vaud canton. In particular, it provides municipalities with instruments to help them attain this objective. The stated purpose of this Act is to tackle the lack of affordable accommodation.
Genesis of this Act
This Act is actually the counter-proposal accepted by the Vaud Cantonal Parliament (Grand Conseil vaudois) in May 2016 stemming from a popular initiative launched in 2011 by the Asloca – the Swiss Tenants’ Association, named “Down with the housing shortage” (Stop à la pénurie de logements). This initiative was withdrawn last spring once the Vaud Cantonal Parliament had approved the Act. The LPPPL was, in turn, challenged in 2016 through a referendum initiated by a committee led by the Vaud Property Chamber (Chambre vaudoise immobilière), which resulted in the February 2017 vote.
What this Act provides for
This Act facilitates the development of rental accommodation. It also promotes rental stock sustainability by limiting sales of this type of dwelling.
The Act also establishes a new category of accommodation, referred to as social housing (LUPs - logements d'utilité publique), which fulfils the following criteria: it is not subsidized, but rent is capped yet still ensures the investor gains a reasonable return. The investor who/which wishes to build LUPs may be granted a bonus.
It also enables municipalities to create specially-dedicated areas for LUPs where no other type of construction can be built on given parcels.
Finally, the L3PL enables municipalities to acquire land for property development to build LUP dwellings. During the most serious shortages, the Act grants them a right of pre-emption when building land goes on the market. It does not oblige them to acquire building land and does not give them more scope for expropriating landowners. According to the Vaud Canton estimates, no more than 15% of property sales is likely to be affected by the pre-emption right.
Preserving rental stock
This Act also offers the Canton with the opportunity to support existing rental stock by providing grants for renovating the dwellings and for improving their energy efficiency. It also favours the creation of accommodation in buildings which hosted offices until now. Does it make sense to keep certain surface areas available as professional premises whenever there is a profligacy of these and affordable accommodation is lacking?
Moreover, administrative formalities are simplified in the case of single renovation and only concern the dwellings in a building. Finally, the Act is strictly applied in districts where the average rate of accommodation available over three years is less than 1.5%. These measures are, however, reduced when this rate returns sustainably above the 1% threshold.
Will this Act be effective?
With regard to the Act itself, it is too early to assess its impact in the field. And, all the more so as the stimulus promised to the property market, and intended for middle classes, has been thwarted by the application of the Federal Spatial Planning Act (LAT - Loi fédérale sur l'aménagement du territoire), which severely limits the development of surfaces available for building. Notwithstanding, according the BCV’s Observatoire économique (Vaud Cantonal Bank’s observatory), the housing market is expected to ease by 2020.
The introduction of the LPPPL opens the door to public interventions promoting the development of low-rent accommodation for middle classes whilst enabling investors to procure an acceptable return. In principle, the Act should lead to an ease on the property market. This will not bear its fruit, however, until the end of the decade.
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