New regulations will label energy-draining homes as unfit for habitation, preventing their rental starting January 1, 2024. Landlords face mandatory renovations, leading to concerns about compliance and legal implications. The law emphasizes tenant rights to request improvements, but confusion remains over its interpretation. With nearly 565,000 homes impacted, experts warn the sudden removal from the rental market could worsen the housing crisis, despite intentions to encourage energy renovations and protect tenants.
New Regulations for Energy-Consuming Homes
Starting Wednesday, properties that are identified as the most energy-draining will be officially labeled unfit for habitation and thus cannot be rented out. This new regulation is causing significant concern among landlords, who are apprehensive about the prospect of mandatory renovations amidst considerable ambiguity regarding how this measure will be implemented.
The Climate and Resilience Law, which was enacted in 2021, is designed to gradually classify homes with poor energy performance as unfit for living. Initially, houses that fell into the G+ category on the energy performance diagnosis (DPE) list were set to be deemed unfit in 2023. As the timeline progresses, starting January 1, homes classified as G will be affected, followed by those in class F by 2028, and class E by 2034.
Landlord Responsibilities and Tenant Rights
This legislation mandates that landlords must ensure their properties meet decent housing standards. If a property fails to meet these standards, tenants have the right to request necessary renovations from their landlords. Should landlords neglect these requests, tenants may resort to legal action to enforce compliance, potentially leading to rent reductions or a suspension of rent payments until the required work is completed.
With decency being a prerequisite for signing a lease, David Rodrigues, legal officer for the CLCV (Consumption, Housing, and Living Environment) association, asserts that theoretically, there should be no rental listings for properties classified as G, nor should new lease contracts be established.
However, there is a lack of consensus among real estate professionals regarding the law’s interpretation, which Rodrigues describes as ‘completely wobbly.’ Questions remain about whether the classification of unfit housing applies universally starting January 1 or only to the renewal of existing leases or new contracts.
The Ministry of Housing has clarified that the prohibition on renting G-class homes applies to both new rental contracts and the renewal of existing leases. Conversely, Me Etienne Chesneau from the Gide Loyrette Nouel law firm argues that the unfitness classification does apply from January 1 to all G-class housing, although the law does not outright ban landlords from renting these properties. This creates a more nuanced legal landscape.
Should landlords choose to rent out G-class homes, they risk facing requests from tenants to ensure that the properties meet decency standards. The law does not include provisions for lease termination in cases of unfitness, and evicting a tenant who has raised a complaint could be deemed abusive.
Rodrigues believes that few tenants will likely file such complaints. He advocates for implementing rent caps on energy-inefficient homes in rent-controlled areas, aiming to provide relief for both tenants and landlords unable to execute the required renovations while still ensuring the properties remain livable.
Concerns also arise regarding tenants’ access to their housing’s DPE, as disclosure is not mandatory when renting a property.
Impact on the Housing Market
A proposed law to clarify the regulations and adjust timelines to accommodate co-ownership constraints was presented at the National Assembly in late October but has yet to be examined due to governmental interventions.
With the upcoming deadline, nearly 565,000 homes classified as G will be affected as of January 1, 2024. This figure is particularly alarming given that recent reforms to the DPE have led to a reduction in the number of properties categorized as F or G since July.
Loïc Cantin, president of the National Real Estate Federation (Fnaim), warns that the scale of required energy renovations is immense, stating that completing all necessary work within four years, especially for small co-ownership properties, is simply unfeasible. Since 2022, over 108,000 G-class homes have undergone renovations, as per official statistics.
Carine Sebi, a professor at Grenoble Ecole de Management, suggests that the intent was not to renovate all G-class homes by 2025, but to send a strong message to landlords to kickstart energy renovations and protect tenants who cannot enhance their living conditions. Despite these intentions, Cantin expresses concern that the sudden elimination of hundreds of thousands of homes from the rental market could exacerbate the ongoing housing crisis.