Renovation works: a deferred repayment loan

It was awaited and essential for the realisation of the works of the Convention citoyenne pour le climat: the Law on combating climate change and strengthening resilience to its effects, more simply called the Climate and Resilience Law, was promulgated on 24 August 2021. Among its 305 measures, some concern housing and more particularly its renovation in order to reduce related energy consumption. Let us focus on a financial aid for the balance of the works, which could make life easier for many owners compelled by law: the renovation advance loan.

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An affirmed modernity of modernising buildings

Housing remains in France the primary source of energy consumption. It consumes 44% of energy produced, compared with 31% for transport. It is therefore naturally targeted by a flagship measure: the obligation to renovate “thermal sieves”, namely habitats falling into categories E, F and G on the energy performance certificate (EPC).

Concretely, such classified housing that is not renovated will not be able to have their rents increased from 2023. They will then be progressively banned from rental, in three stages:

• from 2025 for the most poorly insulated housing (classified G);
• in 2028 for those classified F;
• in 2034 for those classified E, which constitutes an addition decided by MPs during the vote on the Law.

The incentive is certain and concerns a very significant proportion of the national stock: according to a government study from September 2020, 17% of housing constituting primary residences are currently categorised F or G, and 24% are rated E. It is therefore 41% of owners who are encouraged – or compelled if they rent their property – to review their approach to insulation.

Let us add, for the small print, that another notable measure concerns large surface area buildings (over 500m²). During construction, extension or major renovation, they will be required to install photovoltaic panels or a green roof.

Overcoming the difficulty of financing renovation works

Let us return to our housing. If imposing the carrying out of works is desirable, it is however not obvious for all owners to find the necessary funds for their completion. Ownership most often implies repayment of a loan, not always covered by the rent received. The most modest households therefore logically lack funds to carry out works costing several thousand euros.

Elderly people also, with a pension amount reducing their standard of living, may encounter difficulties. And 62% of thermal sieves belong to people over 60.

Some aid schemes are already in place, such as Ma Prime Rénov’ which allows the amount payable to be reduced, or zero-rate loans helping to spread the expense. For modest incomes, the balance to pay may still prove too burdensome, which is why the Climate and Resilience Law also provides for significant aid to bear it: the “renovation advance loan”.

A loan repayable later

The Law on energy transition of 2015 already provided for a scheme called “prêt avance mutation”, whose principle is taken up again. This involves granting a mortgage-type loan, the capital of which will only have to be repaid upon the resale of the property or, as the case may be, the settlement of an inheritance. Caution, the accrued interest will however have to be repaid. The measure is therefore not free, but nevertheless provides a financing facility that should interest many owner-occupiers or landlords.

To ensure the distribution of this loan, two banks have volunteered: Crédit Mutuel and Banque Postale. Others should follow, all the more so as the government provides guarantees in case of repayment default; notably if the sale of the property does not allow the loan to be repaid, which remains however a marginal scenario. A Guarantee Fund for Energy Renovation has thus been created, through which the State covers 75% of potential losses of lending banks.

The details of this loan, and notably the timescales, the types of renovations concerned or any income conditions, are not yet fixed. No doubt the information will reach us in the coming weeks via an application decree, as distribution by banks must begin at the start of 2022.

France, which is significantly behind in Europe regarding the energy efficiency of its housing, is proposing an ambitious plan to become, within around ten years, an example in this area. And clearly, the government is providing means for this will to become that of everyone. All the better, for it is up to all to make their personal contribution to the improvement of our collective living conditions, beyond the mobilisation in the face of the climate challenge.