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What impacts do ecology have on the real estate market?

The Earth Summit in 1992, the Kyoto Protocol in 1997, the inclusion of the ‘Charter of the Environment’ in the French Constitution... All these events have already prefaced a major social fight in the 21st century: the environmental question. Today, construction and renovation work in real estate respects thermal and environmental regulations. Real estate professionals, as well as government institutions, have taken these additional requirements into account and therefore act accordingly.

The ‘Grenelle de l’environnement’, a defining event for the future of real estate

The ‘Grenelle de l’environnement’ is a key event that has permanently impacted the real estate industry. Since then, many laws and incentives have emerged because of the importance of real estate in the debates. In fact, the industry accounted for 40% of energy consumption in 2007 and a quarter of greenhouse gas emissions!

The environmental impact of a building is now at the heart of any real estate project. For each individual case, there are different tax relief schemes to promote green and sustainable real estate construction.

New real estate and ecology

The Grenelle law introduced significant and ambitious measures for all future construction projects. Even if it is sometimes a mixed picture, the application of the low consumption regulation is now systematically written into the DNA of the newest buildings, especially in the public sector. Their energy consumption can not exceed 50 kWh / sqm / year, which represents significant progress and growth for companies in partnership with new actors of the ecological construction market.

By 2020, new buildings must meet the criteria of "positive energy" and present a consumption report, which will contribute to the development of innovative measures in the real estate industry.

- L'impact de l'écologie sur le secteur de l'immobilier

Old real estate and ecology

Older properties are also affected by the legal provisions of the Grenelle de l'environnement. There are three main categories of measures.

Public buildings had to carry out an energy audit before 2012 in order to reduce their energy consumption by 40%. As a result, potential works have to begin within ten years to meet legal requirements.
Social housing agencies received subsidy and loans at preferential rates as part of the renovation of buildings which consumption was over 230 kWh / m2 / year. The objective is to reduce this consumption to less than 150 kWh / m2 / year before the end of 2020.

Regarding the private housing stock, no coercive measures were considered, which led to some criticism of the lack of firm legislative adjustments. However, many financial incentives have been put in place. In particular, there are zero-rate loans and the extension of the home ownership assistance scheme, which encourage buyers to turn to properties meeting pre-established energy consumption criteria, whether it is before or after renovation work.

Ecology, taxation and real estate opportunities

The French State has promoted strong taxation measures in order to stimulate the real estate market with environmental considerations. The incentives resulting from the Grenelle de l'environnement are supported by various systems, each aimed at promoting the attractiveness of ecological residences and at reducing the cost of applying the new thermal standards.

The Pinel law and the Censi-Bouvard measure

The Pinel law is a measure allowing investors in rental real estate to benefit from a tax credit of up to 21% of the value of the property. The Censi-Bouvard measure allows you to benefit from a tax reduction of 11% on the price of the property, provided that the investment helps to promote tourism, the creation of a retirement home or student housing.
Buildings that comply with the new thermal requirements in respect with the standards currently in place can also claim an environmental tax exemption. These financial incentives are coupled with a growing attraction for environmentally-friendly homes, labelled RT2012 or BBC, which therefore benefit from high rental demand and rents above the national average.

The Malraux law for historic real estate properties

The Malraux law applies for old building renovations as part of a rental investment for a minimum duration of 9 years. The purpose of this law is to keep heritage safe and preserve historic buildings while adapting surfaces to modern environmental requirements.
Indexed to the geographical location of the location, tax deductions can be very interesting. In protected areas, they reach up to 30% of the total price of the building, within the ceiling of 100,000 euros per year. In the context of renovation work justifying a rental project and reinforcing the energy quality of the building, buyers also benefit from a 5.5% VAT reduction.

Ecology and first home ownership

First-time buyers are not forgotten by the government. The sustainable development tax credit allows households equipped with appliances that reduce the household's energy consumption to be granted a tax reduction, based on the number of people living in the home.

Landlords can also claim this tax reduction for up to three homes per year. The installation of wood heaters, heat pumps, voltaic panels or insulation systems benefit from a drastic drop in VAT, up to 5.5%. Finally, some organisations, such as the National Housing Agency, provide individual subsidy.

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