Energy ratings significantly affect rental properties in France, with 646,000 classified as G and facing legal implications post-January 2025. Sébastien, an Aurillac apartment owner, finds himself in a bind after his property’s rating dropped from E to G, complicating his ability to rent or sell. With costly renovations needed to improve the rating and a challenging market, he considers selling at a reduced price, hoping to attract first-time buyers despite the obstacles.
Understanding the Impact of Energy Ratings on Rental Properties
According to the National Real Estate Federation (Fnaim), there are a staggering 646,000 thermal sieves rated G on the energy performance diagnosis (DPE) within the French rental market. Starting January 1, 2025, these homes will be classified as indecent in terms of energy efficiency, as mandated by the Climate and Resilience Law. Landlords with G-rated properties who choose to sign new leases after this deadline could face legal repercussions from tenants seeking to halt rent payments and demand immediate energy renovations.
Case Study: Sébastien’s Dilemma with His Aurillac Apartment
Sébastien, an owner of a three-room apartment in Aurillac (Cantal), recently faced a shocking revelation when he discovered that his property now holds a G rating on the DPE. Initially, his apartment was rated E when he first rented it out. However, DPE assessments are valid for a decade, and as Sébastien prepared to re-rent after his last tenant moved out, he learned that the calculation methods for the DPE had become stricter in 2021, leading to his current rating.
With the clock ticking down to January 1, 2025, Sébastien contemplated finding a tenant quickly to sidestep the new regulations. However, with less than three weeks remaining, he realized that the energy indecency classification affects not only new leases but also those that are renewed or tacitly extended after the date. “I had considered renting it out as a tourist furnished rental,” Sébastien shared.
Unfortunately, the recent “anti-Airbnb” law, which took effect on November 19, prohibits thermal sieves from being rented out as registered tourist furnished rentals starting January 1, 2025. Though Sébastien could register his property as a tourist rental before the deadline, he believes the effort is not worth it, given the necessary renovations and the management complexities involved.
Another option for Sébastien is to renovate his apartment to elevate its DPE rating by at least one level, as the rental ban will only extend to F-rated homes by January 1, 2028. However, Sébastien is deterred by the hefty price tag of approximately 10,000 euros for renovations. With a mortgage still to pay and no rental income since his last tenant left, he finds himself in a precarious financial situation, ultimately deciding to sell his property.
Yet, the market poses its own challenges. “Most of the inquiries I get are from rental investors due to the high demand for student housing in Aurillac, but my G DPE rating is a deterrent,” Sébastien explained. In an attempt to attract buyers, a real estate agency proposed reducing his asking price from 80,000 to 65,000 euros. Parting with 15,000 euros is not an easy decision for him. His last glimmer of hope lies in the possibility that a young couple looking for their first home might fall in love with his three-room apartment.