The 2024 Finance Act and property

France’s commitment to the ecological transition takes concrete form with the allocation of €40 billion to this area, with direct repercussions on the property market: substantial renovations to improve the energy performance of existing buildings, and stricter environmental standards for new construction.

At the same time, increased financial support for MaPrimeRénov' (the state grant for energy renovation) marks a notable acceleration in the energy renovation effort. The existence of 3.1 million vacant dwellings in France in 2023, up by almost 1.2 million since 1990, offers an opportunity to target these properties for energy renovation, particularly those suffering from structural vacancy. This approach must nevertheless be managed carefully to avoid hasty investment in areas of high vacancy.

The state is strengthening its role as regulator, notably through the gradual ban on letting poorly insulated dwellings. This measure illustrates the government’s determination to eliminate energy-inefficient housing, which could prompt owners to make major investments to bring properties up to standard. Necessary to achieve climate targets, this policy raises the question of the balance between immediate costs for owners and long-term benefits in terms of energy efficiency and property value.

The reform of the taxation of furnished holiday lets reduces the allowance from 71% to 50%, bringing their regime into line with that of traditional lettings. The measure aims at a more balanced tax framework between types of letting. But by increasing the tax burden on furnished holiday lets, it could discourage investment in this sector, with repercussions on the supply of tourist accommodation.

The Act introduces significant tax allowances on capital gains from building land, to stimulate multi-unit residential construction in urban areas where demand is high and supply insufficient. The aim: to encourage landowners to sell or develop their land. While this incentive may increase supply in the short term, its effectiveness against the structural housing shortage remains to be demonstrated.

The 2024 Finance Act proposes reforms that could profoundly transform the French property market. Their success will depend on the ability to balance innovation and practicality, ensuring that the reforms genuinely encourage market fluidity while meeting sustainability objectives.