The French property market has plateaued after the recovery that began in autumn 2024. Buyers are negotiating harder, properties are taking longer to sell, and house prices are falling more sharply than apartment prices. In this climate, making a successful purchase, sale or rental investment means understanding technical factors that general guides tend to overlook.
Energy performance certificates and recalculations: an underestimated factor before any property transaction
An energy performance certificate (EPC) now determines whether a property can even be rented out. Properties rated G are subject to a rental ban, and those rated F will follow. Before buying or selling, the first question to settle is whether the existing EPC is reliable.
The latest calculation rules can change the rating of some electrically heated homes without any renovation work. A property rated F or G may move up to E after a new assessment. For an investor, this can radically change its rental potential. For a seller, it can prevent an unjustified price reduction.
The reverse is also true: an older EPC, issued before the calculation method was updated, may overstate a property’s energy performance. We recommend commissioning a new assessment before listing a property or committing to a purchase, rather than relying on an outdated document.
In a co-owned building, matters become more complicated if the owners’ association rejects the insulation or heating work needed to improve the rating. The landlord is then caught between a rental ban and an inability to make changes to the building. This risk should be identified before signing the preliminary sales agreement by reviewing the minutes of the owners’ association meetings for the past three years.
You can find further analysis of these trade-offs in Mon Portail Financier’s property advice, particularly on the relationship between taxation and energy performance.
LMNP tax on resale: the trap gross rental yield doesn’t reveal
Non-professional furnished rental status (LMNP) remains attractive thanks to accounting depreciation, which reduces tax during the ownership period. The problem comes when you sell.
Tighter LMNP tax rules change how capital gains are calculated on resale. Depreciation claimed during the rental period may be added back to the taxable base when the property is sold. In practice, an investor who has depreciated a property for ten years and sells it for what appears to be a modest capital gain may face a much higher tax bill than expected.
This change makes any profitability analysis based solely on gross rental yield or annual tax savings obsolete. Exit taxes must be included in the overall profitability calculation from the time of purchase, not when the property is sold.
What this means for a furnished rental investment
- The IRR (internal rate of return) over the full holding period falls significantly if exit taxes have not been factored in. An investment with an attractive advertised gross yield can deliver lacklustre net returns after resale.
- The optimal holding period is longer: the longer the property is held, the more the holding-period allowance offsets the depreciation added back to the taxable base. Selling before eight years is rarely worthwhile.
- The choice between furnished and unfurnished rental must be reassessed on a case-by-case basis, taking into account the actual-expenses tax regime, deductible costs and the planned exit strategy.
Property prices and sales volumes: two indicators that tell different stories
Notaries’ forecasts point to prices stabilising in autumn, but transaction volumes remain below pre-crisis levels. This divergence between prices and volumes is a signal worth reading carefully.
A market where prices are stabilising but transactions remain low suggests that sellers and buyers are not seeing eye to eye. Sellers are holding firm on their asking prices, while buyers are waiting for further price cuts or struggling to secure financing. For buyers, this creates room to negotiate: properties that have been listed for a long time are the ones with the greatest scope for discussion.
Buying property: local indicators to watch
National averages conceal considerable regional differences. Prices are falling more sharply for houses than for apartments, and some employment hubs are seeing their markets pick up while others remain stagnant. Before buying, check these three local indicators:
- The average time to sell in the target municipality, available from notaries or local property observatories. A period exceeding three months points to a buyer’s market.
- The area’s rental vacancy rate, which determines the risk of a rental investment. A high rate makes any rental project more vulnerable, regardless of its theoretical yield.
- Trends in building permit applications: an abundant supply of new homes puts downward pressure on existing property prices over the medium term and limits capital appreciation.
Selling property: timing and the tenancy information notice as practical tools
For landlords looking to sell an occupied property, updating the mandatory information notice attached to the tenancy agreement is a compliance requirement that should not be overlooked. If the notice is out of date, it could undermine the validity of the notice to vacate for sale.
The timing of a listing matters just as much as the asking price. In a market where buyers take their time, listing a property in July or December means losing several weeks of valuable exposure. The back-to-school period (September–October) and the start of the year (January–March) see the highest number of active property searches.
Setting the right price from the outset is more effective than making a series of successive cuts. A property listed too high and then repriced two or three times loses credibility on property portals, where buyers can track listing histories. Setting the right price from the start, using local notarial sales data rather than online estimates, shortens the time to sell and preserves room for negotiation.
Today’s property market rewards thorough preparation. An up-to-date EPC, a clear understanding of exit taxes and a price based on reliable local data: these three factors can make the difference between a successful transaction and a project that stalls.
