SHARE
COPY LINK
For members

PROPERTY

How rules for owning and renting property will change in France in 2023

The New Year spells new rules for property owners and tenants in France. Here is what you need to know to stay on top of the changing regulations

How rules for owning and renting property will change in France in 2023
(Photo by Damien MEYER / AFP)

Energy efficiency

Landlords in France must ensure their properties meet minimum energy efficiency standards from January 1st, 2023, as rules come into effect that ban the renting of properties that have category G rating following a diagnostic de performance énergétique (DPE).

The rules do not apply to houses that are already under a tenancy agreement, but any property rented to a new tenant, or any renewed agreement will be affected.

Tenants in properties that do not reach minimum energy efficiency levels can claim a rent reduction while the landlord is obliged to carry out works to improve the property’s energy efficiency rating. 

Landlords who carry out energy improvement works can receive a reduction on their taxe foncière.

Seasonal short-term lets, such as holiday lets, are not included in the energy efficiency legislation, but France’s Minister Delegate of Cities and Housing Olivier Klein has announced plans to remedy that oversight in the near future. He told Le Parisien: “We will do our utmost to ensure that the prohibition on renting out furnished tourist accommodation is applied to the same extent as to the entire rental stock.”

READ ALSO Bail mobilité: How France’s short-term rental contracts work

By the book

To ensure the above, from January 1st, a property owner – whether they live in the property or not – who carries out “work with a significant impact on the energy performance” of a property, will have to include all documentation and invoices in a Carnet Information Logement (CIL). 

This carnet must include documents and invoices concerning the energy consumption of a property, including a DPE, but also any other major work carried out.

It can be paper or digital, and must allow anyone with an interest in the property to follow the development of the property over time. It is intended to be “the memory of the dwelling” according to the Ministry of Ecological Transition. 

It is up to the owner to update it regularly and to make it available to buyers or tenants as necessary.

READ ALSO What you should know about paying rental deposits in France

Paris rent controls

Rent control management in the French capital for the next three years will fall under the aegis of the City of Paris from January 1st, giving the City the ability to monitor and sanction any landlord who does not comply with rent controls in the capital that have been in force since 2019.

According to the Encadrement-loyers.fr app, 35 percent of classified ads published in the capital are non-compliant, rising to 51 percent for ads for spaces of less than 30m2.

Rent index

The rent reference index may increase from July 1st, 2023. This index, which serves as the basis for rent increases in France, varies according to inflation. It was capped at 3.5 percent in France in 2022 by the government in an effort to protect tenants from soaring inflation. There is no guarantee that this threshold will be maintained with the expected decrease in inflation in the coming months.

Energy audits

From April 1st, a full energy audit will be mandatory for the sale of a house or a property in single ownership that has been classified F or G by its DPE – and is therefore considered to be a ‘heat sink’.

This document, which is more in-depth than a DPE, must propose and list the work to be done to improve the energy classification of the property, indicating the expected energy savings, estimated cost of the work and main financial assistance available.

Tax rises

Expect to see taxe foncière increases as local authorities seek to offset a drop in finances as taxe d’habitation income is cut, while many are also increasing taxe d’habitation charges for second homes – in Paris, the city council has voted to increase the tax by 52 percent in 2023, to a rate of 20.50 percent.

READ ALSO Taxe foncière: How you could pay less French property tax

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

SECOND HOMES

New French property tax declaration – your questions answered

This year the French tax office has announced that property-owners have to complete an extra tax declaration - from the rules for non-residents to second-home owners, we answer your questions on this.

New French property tax declaration - your questions answered

In 2023 there is an additional requirement for anyone who owns a home in France – they must fill in a one-off Déclaration d’occupation, stating whether their property is their main residence or a second home.

The reason for this is changes to the tax system that are gradually phasing out taxe d’habitation for all but the highest earners – with the exception of second homes.

You can find a full explanation of how to file the declaration HERE.

Many of our readers have contacted us with questions about this new requirement, so we’ve answered some of the most frequently-asked here;

Do I still have to do this even though I don’t live in France?

A fairly sizeable number of people own property in France (usually holiday homes) but live elsewhere, such as the UK or the US. If you don’t live in France or have income in France you probably won’t have to do the annual income tax declaration, but the Déclaration d’occupation is different.

It concerns anyone who owns property in France, including second-home owners who live in another country.

Do I have to do this even though I pay all my taxes in another country?

If you own property in France you probably do, in fact, pay tax here – property taxes. Bills go out every autumn for the taxe foncière (the property owners’ tax) and taxe d’habitation (the householders tax) – and second-home owners would usually pay both. You may also receive a bill from your commune for waste-collection services, although the annual TV licence bill (which used to be sent out at the same time as the property tax bill) has been scrapped this year.

If you own property in France and have never paid property taxes, it might be worth a trip to the local tax office to check that you are registered correctly, as almost all property owners are liable for property taxes.

Do I have to do this every year now?

No, this is a one off. You complete the declaration this year (before June 30th) and then you don’t have to do it again until your situation changes – eg a second home becomes your main residence.

Why do we have to do this?

It’s because of changes to the tax rules. Taxe d’habitation – the occupier’s tax – used to be paid by virtually everyone, but is now gradually being phased out for all but high earners. The exception to this is second homes, so the tax office needs to know whether your property is used as your main residence or a second home so that they know whether to send you a bill in autumn.

Does this mean more taxes?

No, the declaration is purely for information – if your property is a second home you will continue to get your annual taxe d’habitation bill as normal, if it is a main residence you may receive no bill or a reduced bill, depending on your income.

What about commercial property?

If you own commercial property such as a workshop, bar or retail premises, then this does not affect you, the tax declaration is in relation to homes.

It’s all about clearing up the property status for taxe d’habitation, and you don’t pay this type of tax if it is a commercial premises.

What about gîtes, holiday homes or Airbnb properties?

It’s really all down to what you use the property for – if you run it entirely as a business it should be registered as a business and is therefore not concerned by this.

If the property is your home and you occasionally rent it out on Airbnb (say, when you’re on holiday) then it still counts as a home and you will need to complete the déclaration d’occupation. Be aware that certain areas, including Paris, limit how many days per year you can rent out a property on Airbnb without registering it as a business.

Some people keep properties mostly for their own use as second homes but sometimes rent them out for extra money – be aware that if you do this, you may need to register as a business and declare any income received – full details here.

Can I just ignore it, or tell them my second home is a main residence?

Ignoring or lying to the tax office is generally quite a bad idea whatever country you’re in – they can get quite cross.

This sounds like a massive pain

Welcome to France – home of bureaucracy! Paperwork is a fact of life in France and that’s probably unlikely to change soon. If you’re already registered in the impots.gouv site then this is one of the more painless admin tasks – a couple of clicks, fill out the form and file it online and you’re done.  

If you have questions on the property tax declaration, you can email us on [email protected] and we will do our best to answer them

SHOW COMMENTS