French real estate market faces new energy and lending constraints

The French real estate market is undergoing significant changes driven by interest rates and new energy efficiency regulations. Prospective buyers and investors must account for the Diagnostic de Performance Énergétique (DPE) when evaluating properties, as energy ratings now directly impact rental legality and property value.

Under current regulations, housing classified as G has been prohibited from new rental agreements in metropolitan France since January 1, 2025. This restriction is scheduled to extend to F-rated properties in 2028 and E-rated properties in 2034. Consequently, investors must factor the cost of energy renovation works into their initial budget to avoid vacancy risks or loss of rental capacity.

Financial planning remains critical, particularly regarding debt ratios. The HCSF maintains a maximum debt-to-income threshold of 35%, a rule that has not been relaxed despite industry requests. Additionally, for those in co-ownership, new requirements such as multi-year work plans now apply to buildings with as few as 50 lots that are over fifteen years old.