The French real estate market is set for significant changes come 2025, impacting both investors and tenants alike. With various housing incentive programs like Pinel, Denormandie, and Loc’Avantages currently setting the stage, investors must comply with newly adjusted rental ceilings and tenant income limits.
Starting January 1, 2025, landlords must lower their rents below market rates for tenants with limited resources, adhering to slightly increased ceilings. These ceilings are applicable to new leases and lease renewals, and failure to comply could result in losing tax benefits. Under the new regulations, amounts for monthly rents excluding charges will rise by 3.26% compared to 2024 rent ceilings, reflecting the rise of the rental index (IRL).
This increment varies by locality: for example, properties zone A will have rent caps at €19.50/m², whereas zones B2 and C will have limits as low as €10.15/m². These adjustments aim to make housing more accessible to mid-income households, yet the absence of the Pinel program from 2025 onwards raises concerns about the future supply of affordable rental units.
The Denormandie regime, which facilitates renovation of older properties, and Loc’Avantages—targeting low-income rental markets—have both been extended until the end of 2027. Investors under Loc’Avantages are required to provide lower rent through agreements with the National Agency for Housing (Anah) to assist modestly priced living arrangements.
Another impactful change is the raising of tenant resource ceilings by 1.1% for the year 2025. This new rule means landlords need to carefully verify tenants’ fiscal references, ensuring they remain under designated limits: €43,953 for single individuals in zone A bis and €32,243 for single individuals in zones B2 and C.
Adding to these developments, the government has introduced measures like the extension of the zero-interest loan (PTZ) and facilitated donations, yet notable rises have been recorded for notary fees and taxes affecting landlords enrolled under the small property investor (LMNP) scheme. These changes may not significantly address the existing housing crisis but reflect efforts to reshape market dynamics.
For example, as housing demand climbs, urban areas like Quimper and Bayonne experience increased real estate activity. Meanwhile, rental properties classified as ecological ‘passoires’ or energy guzzlers face new challenges, as these units are now banned from renting due to new regulations.
The future rental market is poised at the intersection of regulatory change and market demand, all with the aim of providing more affordable housing options for the population. Investors must navigate carefully through these updates to maintain compliance and viability of their investments.
At the same time, prospective tenants must stay informed about the changing standards as they seek secure and affordable housing within this transitional environment.