The impact of the French climate change policies on French property owners

France hosted the UN Climate Change Conference (COP21), which resulted in the signature of the historic Paris Agreement that was acclaimed as a breakthrough in the fight against climate change, so it is perhaps not surprising to see the French government introducing various measures aimed at reducing carbon gas emissions at the domestic level too.

Two new bills were recently passed in an effort to tackle the issue: the ‘Loi Energie Climat’ in 2019 and the ‘Loi Climat et résilience’, which came into force on 25 August 2021.

In this article, we will explore the impact of these measures on French property owners and their ripple effect on the French conveyancing process.

Energy efficiency survey and improvement works

A French property seller, or an owner who intends to let his/her property on a long-term basis, is required to produce an energy efficiency report to the prospective buyer (or tenant). This survey gives a rating of the property’s energy efficiency and greenhouse gas emissions. The ratings range from Grade A to G with A being the most energy efficient and G the least efficient.

This requirement is not new but, until last year, this report was issued for information purposes only so neither the seller/owner nor buyer had to be particularly concerned by the conclusions or recommendations made in this report.

However, since July 2021, the energy efficiency survey carries the same weight as any other diagnostic surveys and the seller’s liability could potentially be engaged if he/she makes a false declaration or withholds some essential information. The survey must now also provide for a recommendation of works to improve the energy efficiency of the property, as well as an estimate of costs. The works suggested in the survey will aim at bringing the property within a B rating in terms of energy efficiency.

Furthermore, as of 1 January 2022, a seller of a property with a F or a G energy efficiency rating needs to disclose the energy efficiency survey to the buyer as soon as when the first viewing takes place. A poor rating could of course put off a few buyers since the burden and costs of carrying the energy improvement works would fall on them on becoming owners.

It could also mean that the property owner would be wise to carry out the energy improvement works first before he/she can attract enough interest and market the property.

The same disclosure requirement applies to properties, which are to be rented on a long-term basis. If nothing is done and the energy efficiency rating remains above E (for now), owners will no longer be able to rent their property on a long-term basis or request a rent increase from their tenant.

Owners of properties can, subject to certain conditions, claim tax relief for carrying such energy efficiency improvement works, but the tax relief can only be claimed for works to a main residence so the owner of a rented-property could not benefit from it.

The current measures only concern the most energy wasting properties but they are to be extended to properties with an E energy efficiency rating from 1 January 2025, and a D rating from 1 January 2034 so only the most energy efficient properties will be spared.

Drainage system

The 2021 Climate Bill also introduces various provisions targeting sewage treatment.

Until now, sellers of properties connected to the mains drainage system were not required to produce an inspection report of the drainage connection as part of the conveyancing process. If the buyer wanted to have the drainage connection checked to make sure that it is compliant, then the onus was on him/her to obtain an inspection survey from the local drainage authority as his/her own costs.

However, from 1 July 2022, it will be compulsory to obtain an inspection report of the drainage connection for properties that are connected to the mains drainage system in areas where wastewater has an impact on water quality of waters marked for swimming competitions during the Paris 2024 Olympics (including the swimming stage of the triathlon in the river Seine). If it is found that the drainage connection is ‘non-conforming’, then the property owner is required to rectify the anomaly within two years.

The law does not go as far as imposing this requirement across the whole territory of France (at least for now), although it will be necessary -from January 2023- to obtain an inspection report where a new connection to the mains drainage system is created – or if the drainage connection is modified. If the property is part of a co-ownership, then it will be the managing agent’s responsibility to request this survey.

By contrast, owners of French properties that are not connected to the mains but have instead a private individual drainage system (septic tank) will already be familiar with this requirement. They must obtain a drainage report dating less than 3 years from the local drainage authority on selling their property.

If the drainage authority finds some anomalies within the individual drainage system and a finding of ‘non-conformity’ is made, then it will be the buyers’ duty to rectify the drainage anomalies (which could possibly require a full overhaul of the drainage system) within 12 months of becoming owners. If the rectification works are not carried out, the new owners can face a fine and be put on notice to carry out the works. Some buyers accepted the risk, especially as it was, up to now, difficult for the local drainage authority to enforce this rule.

However, the 2021 Climate bill creates a duty on Notaires, following completion of a sale of a property, to lodge with the relevant drainage authority an attestation containing details of the transaction, the property and of the buyers (including their contact details).

One can only presume that this new measure is aimed at facilitating a follow-up by the local drainage authority and create more systematic checks and re-inspections of ‘non-conforming’ drainage installations post-completion.

This same notification requirement will come into effect from 1 July 2022 for properties connected to the mains drainage system that are within the above 2024 Olympics area.

New owners of properties should therefore beware, as there is scope in the legislation for increased scrutiny and sanctions.