Buy-to-let investment
DPE F and G: how to finance an energy-inefficient property in Lyon, including renovation works
A DPE F or G property can be financed: quotes before the offer, works in the loan, deferred repayment until completion. What the bank requires, in Lyon.
A property classified as F or G can be financed: no legislation prohibits it, and the bank assesses the resale value of the property and its ability to be legally let. The application is supported by quotes from contractors established before the purchase offer, a single lending budget for the purchase and the works, released against invoices, and a repayment deferral aligned with the construction schedule, within the limits set by the High Council of Financial Stability.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- No legislation prohibits financing a property classified as F or G: the bank assesses its resale value and its ability to be legally let.
- The prohibition applies to letting, not to sale or occupation, and takes effect upon the conclusion or renewal of the tenancy agreement.
- Quotes established before the purchase offer transform the assessment of the application: the bank finances the renovated property, not the letter of the diagnostic.
- A construction project that delays the handover of the property may justify an extension of the term, subject to two cumulative conditions: the scale and nature of the works.
- The discount only compensates for the works if the programme is quantified before the offer: the maximum purchase price is derived from the value of the renovated property.
Yes, a property classified as F or G can be financed, provided there is a costed renovation plan: quotes before the loan offer, a single lending budget covering both the purchase and the works, and a repayment holiday aligned with the construction schedule. This structure applies to a buy-to-let investment as well as to a principal residence requiring renovation.
Rental ban timeline: what it targets
The Climate and Resilience Act phases in the ban on letting by energy class. The timeline has changed several times: please verify your deadline with France Rénov' or the text in force on the day of your loan offer.
- Only the act of letting is targeted: you may purchase, occupy, or resell the property.
- The criterion applies at the point of the contract: new tenancy, renewal, or extension.
- An existing tenancy is not a safe haven: the tenant may request compliance from the court.
The bank assesses a project, not a letter
No text prohibits financing a property based on its energy class. The lender examines its resale value and a rent that is legally collectable throughout the term of the loan.
Without works, an F-rated property will cease to be lettable before the end of the loan. With a costed programme, it is a different case. Two documents shift the analysis to the completed property:
- quotes from firms that are named, dated, detailed, and from insured professionals;
- a projection of the energy rating after works (energy audit or thermal study).
For a complex file, please add the construction schedule and ten-year insurance certificates. The real obstacle is a G-rated property without quotes: this is something you can rectify on your side.
Purchase and renovation within a single lending budget
The loan finances the purchase and the renovation, secured by the property, and is disbursed against invoices. Amortisation may be deferred until the end of the works, within the limits set by the High Council of Financial Stability.
The extension of term to be sought
La maturité est la somme du différé et de la période d'amortissement, jamais l'amortissement seul.
- En vigueur depuis le
- Source
- Décision D-HCSF-2021-7, art. 1er — Légifrance
A construction project delays the move-in: in the case of a resale property, two cumulative conditions allow for an extension of the term.
Ce seuil a été abaissé par rapport à sa rédaction d'origine. Il se calcule sur le coût total de l'opération, pas sur le seul prix d'achat.
- En vigueur depuis le
- Source
- Décision D-HCSF-2023-6, art. 1er — Légifrance
- création de surfaces habitables nouvelles ou de surfaces annexes
- modernisation
- assainissement
- aménagement des surfaces habitables ou des surfaces annexes
- réalisation de travaux de rénovation énergétique
La rénovation énergétique y figure expressément. Un simple rafraîchissement décoratif, non.
- En vigueur depuis le
- Source
- Légifrance
Two limits then apply together:
- En vigueur depuis le
- Source
- Légifrance
Contrainte cumulative avec la précédente. L'allongement de maturité paie le différé, il n'allonge pas la période pendant laquelle vous remboursez du capital.
- En vigueur depuis le
- Source
- Légifrance
Plafond, et non condition d'ouverture : c'est l'écart entre les deux bornes précédentes. Le différé accordé suit la durée réelle du décalage d'entrée en jouissance, dans cette limite.
- En vigueur depuis le
- Source
- economie.gouv.fr
This is a ceiling: the deferral follows the actual duration of the works.
The mechanics, step by step
- Programme finalised before the purchase offer, with quotes in hand.
- Single lending budget: purchase, fees, works, one guarantee, one insurance.
- Works funds released against invoices, never in advance.
- During the deferral period, interest on the sums released and insurance: the carrying cost.
- Amortisation at handover, when the rent begins.
Why not a works loan afterwards? No second guarantee, a residential mortgage rate, and a borrowing capacity not yet consumed (see the calculation of an investor's debt-to-income ratio). The longer term costs more in total: see the calculation of the profitability of a buyback. Compare with the formula for the instalment, purchase only, then purchase plus works.
Does the discount compensate for the works?
Sometimes, never mechanically. The discount is negotiated, the works are quantified: the two only meet if the programme is established before the offer.
Start from the value of the property renovated, and deduct:
- the complete programme, including project management;
- a contingency margin;
- the carrying cost of the site: interest, insurance, charges, council tax;
- your target profitability.
The remainder is your maximum price. Prices by borough: their article.
Old condominium: the documents to read before the offer
- The minutes of the general meetings: works voted on to be negotiated in the preliminary sale agreement.
- The multi-year plan and the works fund.
- The collective energy performance certificate: a voted insulation measure can gain classes for your lot.
- The history of a lot resulting from a division: regularity, shares, networks.
Purchase, works and green loan: the instalment is smoothed by the smoothing of loans.
The grants: an advance to be anticipated
The grants are paid after the works: your loan or your savings cover the advance. The details: the green PTZ and the grants.
Investor: three cumulative conditions
- A programme itemised by quotes before the loan offer.
- A single lending budget, with a repayment deferral aligned with the construction work.
- A post-works rent compatible with the rent controls: see residential financing in Lyon.
Is a condition missing? Do not submit yet. Have the purchase and works plan checked by telephone, with the quotes and the property surveys in hand.
Create your file: submit the quotes and the EPC once.
Sources
Read next
- How much can I borrow? Mortgage capacity in Lyon
- Green PTZ: Financing the energy renovation of a home in Lyon Eligible works, amounts, co-ownership, combining with the main loan and MaPrimeRénov’: financing a renovation without hurting your debt-to-income ratio.
- Financing a rental investment in Lyon: what the bank actually looks at Financing a rental investment in Lyon: the rent the bank takes into account, the expected down payment, the mode of operation and the structure that holds up.
- Works voted on in a co-ownership before your purchase: who pays, and on what date Works voted on before the sale of an apartment: what the 1967 decree places on the seller or the buyer, and what the preliminary sale agreement can change.
- Loan smoothing: multiple loans, one instalment, the cost and what to demand One instalment for multiple loans: how the lender smooths the schedule, the cost, the effect on your zero-interest loan and the six questions to ask.
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