How the law banning the rent of housing with high energy consumption is shaking up the French real estate market?

Thomas Lefebvre and Barbara Castillo Rico

ERES from European Real Estate Society (ERES)

Abstract: The "Climate and Resilience" law aims to accelerate the ecological transition of French society and economy. All sectors are concerned: agriculture and transport, among others, but also housing. More specifically, this law targets landlords of the most energy-consuming properties by banning them from the rental market. In France, according to the regulation, more than 5.2 million dwellings are considered inefficient and won’t be allowed to be rented in 2028. The first rental restriction of this law came into effect in January 2023: the worst housing in terms of energy performance cannot be rented anymore. This represents around 500,000 housing units. In this paper we assess the impact of this new regulation on the french real estate market. Do landlords renovate their housing or do they prefer to sell? Do their behavior have an impact on sales and rental prices ? What is the perception of the owners about these regulatory changes in favor of energy transition in housing? Based on the observation of 5 million listings published on the french leading professional real estate portal between 2018 and 2022 (SeLoger.com) and a survey that collected 5,000 responses related to the perception of the impact of the law on the decision process to sell or buy a property, our results suggest that energy consumption of the dwelling has started to become a valuation and selection criteria to buy and sell on the french real estate market. Our results show a significant increase in the number of sales of low-energy homes since 2021: 19.2% of the properties listed on the market for sale in 2022 are not energy efficient versus 11% in 2021. In addition, dwellings with high energy consumption are listed on the market with a selling price of -3.9% less expensive than an equivalent property with better energy efficiency. Therefore, there is a significant difference in the evolution regarding the energy efficiency score. In France, prices of properties with higher energy efficiency have increased on average by +3.7% since July 2021, which is two times less than the other properties (+7%)

Keywords: Housing Policy; Sustainable Real Estate; Valuation (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-ene and nep-ure
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