Newsletter#3 – January 2019: “The elevation of condominiums in France”

The French housing portfolio consists of 20.4 million individual houses and 15 million apartments in 1.2 million buildings, or in other words – 600,000 condominium unions, 8.4 million co-owners and 20,000 condominium property managers.

Built mainly in the 1950s and 1960s, this portfolio has of course aged and new constraints have increased the financial obligations: the Grenelle Environment Forum in 2006 led the legislator to set new energy performance targets. In addition, the maintenance of the elevators is another heavy budget item that has made co-owners aware of the obligation to invest in their property.

On the other hand, the French government, which sets targets for saving energy consumption, – 38% by 2020, faces the reality of the amount of required investments, which is estimated at an average of €20,000 per housing unit, or €168 billion, to be raised by the co-owners. These objectives have also been weakened by promises of amortization of investments by savings in consumption, which has proved to be impossible to achieve, even if these savings contribute to it.

According to the National Housing Agency, it would cost € 20,000 per housing unit to carry out a major energy renovation in line with European and international commitments (ENERGY Directive and COP 21).

An association, Planète Copro, helps French co-owners to organize themselves and provides them with the necessary tools to engage in the renovation of buildings. A specific association, Plan Elevation, focuses on the elevation of the buildings in co-ownership.

National relief and subsidies for energy renovations are declining due to the withdrawal of member states who are seeking to reduce their public deficits.

The self-financing of the renovation works by the co-owners runs up against the “wall of money”, that is to say the absence of equity among the co-owners, which can cause the building to be listed with the “condominiums in difficulty”, and to energy poverty.

The French Legislation is in Favor of Elevations

France, with its new real estate laws which have been in place since 2014 as well as the new law of urbanism on elevations, encourages this process which can only bring back new revenue to the State through the “green growth”.

The elevation is therefore an attractive formula to encourage the renovation of public and private buildings.

France changed its urban planning code in 2014, allowing exceptions from the classic rules to allow elevations. It even allows even greater exemptions if the project saves energy on the building as a whole.

The building may be elevated by one or two floors, which can also benefit from an extension by creating loggias and balconies in the existing part of the building. This also seems to correspond with the means recommended in the framework of the European project ABRACADABRA to achieve the objective of improving energy efficiency in residential buildings.

The achievement by the condominium on the sale of the roof to a third party allows the renovation, more particularly the energetic renovation, of the building and the increase of the comfort and the well-being of the inhabitants who furthermore see a decrease in their expenses and an increase of the market value of the apartments.

France is ahead in its civil law because it allows condominiums to vote the elevation upon a majority of 50% plus one vote in major cities which has unlocked the market since the vote of the ALUR law in 2014.

The French DTG (Comprehensive Technical Diagnosis), which must now be submitted to the AG of condominiums, includes an “elevation” section to encourage the latter.

The French ELAN law (October 2018) created the concept of “transitory lot of co-ownership” which allows a legal basis that complements the elevation operations, as was requested by the professionals who have been heard.

The city of Paris has commissioned a study to locate 11,000 buildings that can be elevated.

France has an incentive tax system: capital gains from the sale of the roof are tax-free.

The specialized public agencies of the ILE DE FRANCE ENERGIES type partly answer the problems of the energy renovations but without any bank capacity of financing the works. However, they come up against the banking world.

In France, the ARTÉÉ campaign is the third operation of energy renovation for buildings, financed by the BEI after the SEM ILE DE France ENERGIES in Ile-de-France, and the Régie SPEE in Picardie.