As the deadline approaches for banning rentals of energy-inefficient homes, many landlords are opting to sell rather than renovate. In 2024, 13% of home sales involved properties rated F or G for energy efficiency. Many sellers, often elderly, prefer to invest in more efficient homes. Renovation costs remain high, averaging €20,000 post-subsidies. Consequently, homes with low energy ratings are depreciating in value, influencing market trends and property pricing significantly.
Landlords Opt to Sell Energy-Consuming Homes
As the deadline for banning rentals of the most energy-inefficient homes draws nearer, many landlords are choosing to sell their properties instead of investing in expensive renovation projects. According to the annual report by Notaires de France, during the third quarter of 2024, 13% of existing home sales were properties classified as energy-consuming, specifically those labeled F or G in energy performance assessments. Following the mid-2021 decree on the gradual prohibition of renting such homes, there was a notable spike in sales of energy-inefficient properties, with their share rising to 16% in 2022 and further to 17% in 2023.
The Challenges of Renovation for Property Owners
For over thirty years, the government has incentivized investments in rental properties through various tax breaks. However, according to Zahir Keeno, the president of Foncia, a prominent property management firm in France, the beneficiaries of these incentives are not necessarily wealthy individuals, and many do not possess the financial resources required to undertake renovations.
Recent statistics reveal that a significant portion of property owners are elderly, with 23% of those owning F or G classified homes being over 80 years old, as per estimates by Loïc Cantin, president of the National Real Estate Federation (Fnaim). This demographic is less likely to invest in substantial renovation works.
Furthermore, individuals over 60 are particularly prevalent among those selling energy-inefficient homes, while simultaneously purchasing properties that are more energy-efficient, classified as A and B. This trend, highlighted by the Superior Council of Notaries (CSN), suggests that many sellers are motivated by the desire to avoid renovation costs, using the proceeds from their sales to invest in better-performing properties.
The financial burden of extensive renovations can be significant, with the average remaining cost for homeowners—after accounting for state subsidies—around €20,000. Elodie Frémont, a notary based in Paris, points out that “you better have a decent rental yield” to offset this expense, especially in cities where rent is regulated.
A recent survey conducted by the BPCE banking group found that 31% of the 2,050 respondents are contemplating energy renovation projects within the next five years, yet only 6% of these individuals own rental properties. Moreover, the energy labels F and G serve as a key selling point for 43% of those planning to sell their homes.
As the market evolves, homes rated F or G are witnessing a decline in value, with average depreciations of 15% for apartments in the Grand Est region and 25% for houses in Nouvelle Aquitaine. Frédéric Violeau, responsible for national real estate statistics at the CSN, emphasizes that the current trend of decreasing transaction volumes and price contractions will further elevate the significance of the DPE label, which increasingly influences property pricing.