Navigating the New Energy Performance Regulations for Real Estate

A Changing Landscape for Property Owners

The French real estate market is witnessing a significant transformation in energy performance regulations. The government has introduced numerous measures aimed at improving energy efficiency and reducing carbon emissions. These changes impact property owners as they come into effect over the next few years.

Key regulatory updates:

  • July 2021: Energy Performance Certificate (DPE) becomes legally binding
  • August 2022: rent freeze for properties with an F or G label on DPE
  • January 2023: rental prohibition for properties with a G label and annual final energy consumption > 450 kWh/m²; inclusion of final energy consumption to the DPE label
  • April 2023: obligation to conduct an energy audit prior to sale for individual houses and single-owned properties with an F or G label
  • January 2024: obligation to conduct a collective DPE for single-owned buildings and condominiums with more than 200 units

Tighter Restrictions on Renting Energy-Intensive Properties

One of the most impactful aspects of these regulatory changes is the gradual prohibition on renting properties with poor energy performance. According to this plan:

  • January 1st, 2025: Prohibition on renting properties classified as G
  • January 1st, 2028: Prohibition on renting properties classified as F
  • January 1st, 2034: Prohibition on renting properties classified as E

This phased approach will undoubtedly lead to an increase in property owners seeking energy-efficient renovations and improvements.

The Importance of Collective Energy Performance Certificates

To further identify areas for energy efficiency improvements, the Climate and Resilience Law requires collective DPEs to be completed. These assessments evaluate the strengths and weaknesses of buildings and provide recommendations for renovations that can improve energy performance.

Schedule for implementing mandatory collective DPEs:

  • January 1st, 2025: mandatory for condominiums with 50 to 200 units
  • January 1st, 2026: mandatory for condominiums with fewer than 50 units

Extended Scope of Energy Audits Prior to Sales

In addition to rental restrictions, the new regulations also mandate energy audits prior to sales for certain properties:

  • January 2025: required for individual houses and single-owned properties with an E label on the DPE
  • January 2034: required for individual houses and single-owned properties with a D label on the DPE

This requirement aims to increase transparency around energy performance for potential buyers and encourage investments in energy efficiency upgrades.

The Impact on Real Estate Markets

These regulatory changes have led to increased apprehension among buyers, particularly those interested in properties with poor energy performance. According to the National Energy Renovation Observatory, nearly 34% of housing units under 30 m² have an F or G label, compared to just 13% for properties over 100 m².

Consequently, there has been a surge in demand for projected DPEs, which estimate a property’s performance post-renovation. These assessments help buyers understand the potential improvements and associated costs after factoring in energy-saving renovations.

Preparing for the Future of Energy Performance Regulations

The changing landscape of real estate-related energy performance regulations will require property owners to stay informed and take appropriate action. Proactive measures include conducting energy audits, renovating to improve energy efficiency, and complying with mandatory collective DPE guidelines according to timelines.

In addition, it’s crucial for landlords to be aware of the phased prohibitions on renting properties based on their energy classification labels. As regulations become more stringent, it’s essential for property owners to invest in energy-efficient upgrades that meet these new standards.

Moving forward, both property owners and prospective buyers must remain well-versed in evolving energy performance regulations to ensure compliance and make informed decisions in this new era of environmentally-conscious real estate.