Starting January 1, homes rated G for energy efficiency will be deemed unsuitable for rent under new regulations, sparking concerns among landlords about potential renovation costs. The Climate and Resilience Law classifies energy-inefficient homes as indecent housing, affecting approximately 565,000 properties. Landlords may face legal actions from tenants seeking improvements, while debates arise over the law’s interpretation regarding rental agreements. A legislative amendment aimed at clarifying the law is currently stalled in the National Assembly.
New Regulations for Energy-Consuming Homes
Beginning Wednesday, properties identified as high energy consumers will be categorized as unsuitable for habitation and will no longer be available for rent. This shift is raising alarms among property owners, who are apprehensive about the potential need for costly renovations amidst ongoing uncertainties regarding the application of these new regulations.
Enacted in 2021, the Climate and Resilience Law progressively categorizes dwellings with subpar energy efficiency ratings as indecent housing. Initially, homes rated G+ on the energy performance diagnostic (DPE) were scheduled to be classified as indecent in 2023. As of January 1, it’s now the G-class homes facing this classification, with F-class homes set to follow in 2028, and E-class homes by 2034.
Understanding the Implications for Landlords
The law mandates that landlords must provide tenants with adequate living conditions. If landlords fail in this regard, tenants are entitled to request renovations, and may escalate issues to the courts for enforcement, which could result in reduced rents or even suspension of payments until the necessary improvements are made. Decent housing is a fundamental requirement for lease agreements, meaning “in theory, no properties rated G should be available for rent,” states David Rodrigues, legal representative of the CLCV (Consumption, Housing and Living Environment) association.
Despite this, real estate experts share differing views on how to interpret the law. Rodrigues describes the legislation as “entirely wobbly,” questioning whether the indecency classification takes effect for all homes on January 1, or solely for new leases or at the time of lease renewals. The Ministry of Housing clarifies that the prohibition on renting G-rated homes pertains to new lease agreements as well as during renewals of existing contracts.
Conversely, Me Etienne Chesneau, a partner at the Gide Loyrette Nouel law firm, argues that the indecency designation applies universally to all G-class homes starting January 1. However, he notes that the law does not explicitly prevent landlords from renting such properties. The implications are nuanced, as landlords who proceed to rent may face demands from tenants for compliance with decency standards. The law does not provide a clear mechanism for lease termination in indecency cases, and eviction efforts against tenants who raise complaints could be deemed unfair.
Approximately 565,000 homes will be impacted by these new regulations. Rodrigues observes that “few tenants are likely to lodge complaints.” He advocates for a rent cap on energy-inefficient homes within rent-controlled areas to prevent undue hardship on both tenants and landlords who lack the means to perform necessary renovations but whose properties remain livable. He also expresses concern over tenants’ access to information regarding the DPE of their residences, as sharing this data is not obligatory for rental properties.
A proposed legislative amendment was introduced in the National Assembly in late October to clarify the law and adjust timelines to better align with co-ownership complexities; however, its review has been stalled since government intervention. The timeline for addressing energy-inefficient homes—viewed as tight and unsustainable by some industry experts and lawmakers—affects nearly 565,000 G-class residences as of January 1, 2024, according to government statistics. A recent DPE reform implemented in July has already decreased the number of properties classified as F or G.