According to a recent study, DPE is disrupting the new and old real estate market in several cities in France.
Additional investment for the old
The real estate market has seen many twists and turns in recent years. In addition to the rise in interest rates, DPE (Diagnostics of Energy Performance) and its obligations are also changing the portrait of rental investments.
As of January 1, 2023, it is forbidden to rent some apartments of category G (with an annual energy consumption of more than 450 kwh/m²). In addition, in accordance with the Climate and Resilience Act, rents are frozen for housing classified as F or G. Renting an old property in category G or F therefore means an additional investment when buying to finance the necessary energy renovations.
Savings of up to 28.24%.
A study by rental investment platform Maslow.immo (present in both new and existing real estate markets) shows a decline towards new properties, despite rising construction costs. By incorporating the average sale price of old properties, notary fees, renovation costs and loss of area, the study reveals significant differences in 7 cities (La Rochelle, Bordeaux, Orléans, Bayonne, Nantes, Annecy and Toulouse) in which the total budget for a new purchase is less important than the budget for the old purchase. Buyers of new properties would thus save an average of 1.44% in Toulouse and up to 28.24% in Lille.
Understanding the differences
Average prices per square meter are usually higher for new properties (+20%) than for old properties. However, buying an old property involves carrying out renovation or development work.
The study proposed by Maslow is partly based on the results of another study proposed by the online real estate agency Flatlooker, which compiled budgets dedicated to 1,000 energy renovations carried out to move from DPE G to F.
The result of the various works was an average renovation price of 1,029 euros per square meter. The differences between the budgets dedicated to new and old properties can also be explained by lower acquisition costs for new properties (between 2% and 4% of the purchase price compared to 7% to 8% for new properties). Acquisition costs include notary fees, amounts related to the processing of the file, as well as various taxes associated with the transaction.
Buy new or old?
New and old have advantages and disadvantages that vary depending on the investor’s profile. Although the purchase price of a new property is higher than that of an old property, the new property offers numerous guarantees of comfort and quality.
Rental investments also allow buyers to benefit from the tax benefits offered by the Pinel system. The former offers greater leeway to first-time buyers or long-term buyers. In addition to negotiating the sales price, they benefit from the quickly available accommodation character, whose development work will allow them to generate possible added value during resale.