JAWS! ep. 6 : Mandatory home insulation

A lucrative market... which will lead us all to end up homeless ??

This article is mainly about people who have at least one other house to rent than that they live in - which is not within everybody's reach.

But it won’t take a long time before these unreachable goals, requiring unaffordable expenses - and based on highly questionable ”criteria” - will force modest owners to sell their homes… and guess who will benefit from it ?

A sinister guy said : «You’ll own nothing…”

“Acceleration of the housing crisis”: energy transition removes 565,000 homes from the rental market

By Germain de Lupiac for The Epoch Times

From 1 January 2025, owners will no longer be allowed to rent out homes with an energy rating of G, a controversial energy efficiency indicator.

The former Minister of Ecological Transition and Territorial Cohesion, Christophe Béchu, had committed to changing the indicator in July to give more flexibility to owners and tenants, but the changes remain below expectations. Before this change in the calculation of a home's energy performance diagnosis (DPE), Les Échos estimated that 500,000 to 800,000 homes were affected by the ban on 1 January 2025. Only 140,000 will have been removed from energy classes F and G, following the new calculations.

According to the State, there are 565,000 G-rated homes still affected by this ban, which will be made inaccessible because they are too expensive to renovate for a majority of small owners. This ban will mainly affect the most modest tenants, who will tend more towards these cheaper housing units, while France needs 400,000 additional housing units per year to be able to meet the demand of the rental market.

G-rated housing units, banned from rental on January 1st

First, it was G+-rated housing units in the energy performance diagnosis (DPE) that were deemed "indecent" in 2023. It is now the turn of G classes from January 1, 2025, before F housing units in 2028, then E in 2034.

According to the law of July 6, 1989, decent housing "must not pose a risk to the safety, health of the occupants or their physical integrity." In 2000, the notion of decent housing became mandatory by the SRU (Solidarity and Urban Renewal) law and in 2021, energy performance was added to the criteria. The decree was preceded by the 2015 Energy Transition Act to combat climate change and followed by the adoption of the "Climate and Resilience" law in 2021, taking up part of the 146 proposals of the Citizens' Convention for the Climate.

This energy sieve schedule, considered tight and untenable by some professionals, concerns nearly 565,000 G-rated homes as of January 1, 2024, according to government data, which specifies that the DPE reform, introduced in July, had reduced the number of small areas classified F or G.

"The energy renovation project is gigantic", it was "impossible to do all this work in four years, especially in small co-ownerships", warns Loïc Cantin, president of the National Real Estate Federation (Fnaim). He fears "an acceleration of the housing crisis" if hundreds of thousands of homes disappear from the rental market. Since 2022, more than 108,000 G-rated homes have been renovated, again according to official figures.

"I don't think the objective set was to renovate all G housing" before 2025, according to Carine Sebi, full professor at Grenoble École de Management, but rather "to send a first strong signal to landlords to initiate a dynamic of energy renovation, and to protect tenants who are not able to improve their housing."

Owners prefer to sell their homes rather than start work

Faced with the ban on renting out the most energy-intensive homes, some landlords have preferred to resell their properties rather than undertake costly and technical renovation work. In the third quarter of 2024, 13% of sales of old homes were energy-intensive homes, classified F or G, report the Notaries of France in their annual report.

In 2022, "a sharp annual increase" in sales of energy sieves followed the publication in 2021 of the decree relating to the energy performance criterion. The share of F or G labels reached 16% of transactions, then 17% in 2023, according to the notaries.

For three decades, the State has been encouraging investment in rental properties through various tax measures, but the beneficiaries of these measures "are not rich" and do not all have the means to finance work, according to Zahir Keeno, president of Foncia Administrateur de biens, the leader in rental management in France.

A significant proportion of landlords are also elderly: "23% of owners of F or G-rated homes are over 80 years old," estimates Loïc Cantin, who warns that they "are not going to undertake major renovation work."

People over 60 are over-represented among sales of old energy-intensive homes and among buyers of A and B-rated homes, the least energy-intensive, according to the Higher Council of Notaries (CSN), which makes the link between selling an energy sieve to avoid carrying out work and buying a more energy-efficient home with the money from the previous sale.

"The context of a drop in the number of transactions and a contraction in prices will reinforce the importance of the DPE label, which has an ever-increasing impact on the price of the property," stressed Frédéric Violeau, responsible for national real estate statistics for the CSN.

A faulty energy performance indicator?

The results of a study by the highly respected Economic Analysis Council (CAE) show that the differences in energy consumption between different classes of housing are much less significant in reality than in theory. However, it is this index that is used to determine the accessibility of the most energy-intensive housing and that has pushed hundreds of thousands of owners to invest in renovating their property or to sell it.

According to the CAE, the key tool for measuring energy renovation is unsuitable for reflecting the actual consumption of households. "Theoretical consumption, calculated by the DPE, and actual consumption may differ because the former does not incorporate household behavior," the report states. Households that think they are well insulated are more likely to change their behavior and consume more energy - the opposite is observed for the least insulated households that consume less.

The actual gap in the energy budget between a home rated A and a G would thus be 6 times lower than the theoretical calculations, a predictive error on which the energy renovation policy has been based since 2021. According to the CAE, this estimation error would be due for a third to diagnostic errors in the DPE of homes and two thirds to household behavioral factors. This observation is not new, according to a HelloWatt study, published in January 2023, nearly 70% of the estimated energy performance scores would be wrong.

The method of calculating the energy performance diagnosis (DPE) of homes changed in July 2024 for areas of less than 40 square meters. According to the government, this corrected a "bias" that disadvantaged small areas. This change allowed 140,000 homes to move out of energy classes F and G, while still leaving 565,000 out of the rental market.

France needs 400,000 additional housing units per year, according to a study

While 565,000 G-rated housing units have been removed from the rental market on the altar of energy renovation, France needs nearly 400,000 additional housing units per year by 2030, mainly because of the "loosening of households", due in particular to divorces and aging, according to a study carried out by the National Union of Developers (Unam) and the Higher School of Real Estate Professions (Espi).

The reduction in the size of households means that "the housing stock is mobilized by single people" and the phenomenon is "underestimated" by the public authorities, the authors estimated.

"The demographic decline does not lead to a drop in demand, on the contrary, the phenomenon of loosening weighs three times more on needs than the demographic phenomenon," confirmed to AFP Paul Meyer, national general delegate of Unam Ile-de-France.

"Some administrations tell politicians 'no point in investing in housing, there will be no need for it tomorrow'. This is false. And this is what we want to demonstrate," he added.

In Paris, the loosening is fueled by the presence of many single-person households made up of young students and young workers or separate households. Elsewhere in France, housing needs are significant around large cities such as Lyon, Bordeaux, Toulouse, Nantes or Rennes, due to the attractiveness of these large cities and the phenomenon of loosening they are experiencing.