For a housing massive transformation

Let us first recall a few basic facts that unambiguously demonstrate the urgent need to act.

We are living longer and so the number of elderly people (often living alone) is increasing. There is also a surge in demand for centrally located housing units that are adapted to the needs of seniors (not too large, easily accessible, and equipped to alleviate age-related loss of autonomy) or are connected to medical care. The topical concern around nursing facilities and, more importantly, the latest demographic figures highlight the need to find solutions in order to provide more living options for seniors, especially in their own homes. France’s first Baby Boomers, born in 1945, will be 85 in 2030. This 75 to 84 year old age group will register an unprecedented growth of 49% between 2020 and 2030, increasing from 4.1 million to 6.1 million people.[1]

In addition, housing is a major contributor to global warming. In France, it accounts for almost half of the country’s energy use and one quarter of our greenhouse gas emissions. Reducing these impacts entails curbing heating, cooling, and power needs through bioclimatic designs, zero-energy and well-insulated buildings, and equipping each unit with ultra-high-efficiency appliances while systematically resorting to renewable energy sources and innovative construction processes. As more than 90% of the multi-story buildings that will be standing in 2050 have already been constructed, their present and future renovation will have a major influence on the climate.

Let us add to this overview[2] that one in six housing units have very low EPC (Energy Performance Certificate) ratings of F and G (often referred to as passoires thermiques in France, i.e., “thermal sieves”), representing 4.8 million principal residences out of a stock of 29.7 million homes. If we refer to the tightened requirements from the Climate and Resilience Law of August 22, 2021, the numbers are even higher. Furthermore, the necessary energy efficient retrofit is not only confined to the most inefficient buildings given that, in 2018, at a time when the new rules on EPC ratings didn’t apply yet, only 2 million housing units achieved A or B ratings.[3] The transformation therefore concerns the overwhelming majority of  private dwellings—a total of approximately 23 million housing units.[4] According to the generally accepted figures, upgrading an apartment to the current minimum energy efficiency standards requires investing a minimum of €15,000 to €20,000 (and double that amount for houses). Therefore, renovating all housing units concerned at an average per-unit cost of €30,000 would cost €690 billion in aggregate—a considerable amount in view of the figures for France’s building industry, and even more so compared to the annual €2 billion envelope announced for the MaPrimeRenov scheme. These elements cast doubt on the ability of individual homeowners and joint property owners to perform energy efficiency retrofits at the required scale.

Finally, I’d like to quote the latest IPCC (Intergovernmental Panel on Climate Change) report, from February 28, 2022, which alerts us on the increase in risk levels in cities, where half of the world’s population lives. Among the top threats, the experts highlight heat stress, which occurs when ambient temperatures exceed the limits of what the human body can withstand. The report therefore states that adapting to climate change in urban areas is critically important to the health and well-being of the majority of the world’s population. It advocates setting efficiency standards for buildings and rethinking urban planning, for example, by developing pedestrian areas in order to increase the effectiveness of the adaptation measures. It also considers that solutions such as tree planting, green roofs, and parks, all of which can help manage excess water flows from heavy rain events, are beneficial for human health when implemented at a large scale.

Each time our country has been confronted with a housing crisis over the course of its history, the focus has historically been on building or demolishing and rebuilding. Our whole legal arsenal has, in fact, been developed to that end. Each and every law, even the most recent ones, have introduced schemes aiming to construct as many housing units as possible and as quickly as possible (and in recent decades, in compliance with new environmental standards).

Together, these facts and figures paint a very dire picture. France likely has not faced such a huge challenge related to housing since the end of the Second World War. It is clear that the present challenge will be much more difficult to address than those from the past. Each time our country has been confronted with a housing crisis over the course of its history, the focus has historically been on building or demolishing and rebuilding. Our whole legal arsenal has, in fact, been developed to that end. Each and every law, even the most recent ones, have introduced schemes aiming to construct as many housing units as possible and as quickly as possible (and in recent decades, in compliance with new environmental standards).

Nonetheless, though the bulk of the effort will have to focus on the existing building stock, recent regulations have been exceedingly unconcerned about anything else than new builds. Admittedly, the Climate and Resilience Law has introduced many incentives aiming to unlock benefits from energy savings retrofits, particularly indirect retrofit obligations. For example, when a housing unit is sold, the new diagnostics and audits that are required will drive buyers to negotiate discounted prices to cover the cost of renovation. In connection with this, the French government is contemplating helping homeowners by creating a type of loan that would be repayable when selling a property. Though such a loan would indeed provide for the funding of retrofits, the costs would then be borne solely by the buyers.[5] Moreover, such an approach can only work if the retrofitting costs don’t result in a loss of value for the selling owner with regard to their original acquisition. Along the same lines, G-rated housing units are considered non-decent and banned from the rental market effective January 1, 2025. F-rated units will follow suit beginning on January 1, 2028, and E-rated units after January 1, 2034.

In its present form, however, the incentives and obligations system for energy efficiency retrofits is not the silver bullet that will lead to a massive transformation of the existing housing stock in order to address climate change and the demographic transition required within a short time frame—this is all the more glaring given that this system does not address all situations.

To bring about this massive transformation will involve overcoming two major and unprecedented difficulties. On the one hand, the sheer number of housing units that would need to be retrofitted and their variety bear no comparison with anything we’ve faced before and it will have to take place simultaneously across the entire country. On the other hand, the fact that the primary stakeholders concerned by this transformation are not limited to the usual cast of real estate professionals (regional and local authorities, developers, promoters, investors, and social landlords), but to all owners of housing property (thus mostly private individuals) makes this task even more complex.

Whatever the base assumptions used, the figures are unequivocal, and the predicted consequences inexorable. This leaves us with no other option than to massively and urgently transform the housing stock. In order to take into account the main stakeholders, i.e., private individuals, our legal apparatus must be adapted to our current challenges. This vast undertaking, in particular, will need to create a variety of new legal frameworks: one for urban planning, construction, and real estate that is geared to retrofits, another for ownership and co-ownership that is more cooperative and allows for a scaling up, and another for urban planning operationalizing and massifying the transformation of the existing housing stock.

Starting anew from a blank slate is something that the French legislature has failed to do for half a century at least. Currently, legislation is expedited at ever-increasing speeds for quick political credit and often to satisfy specific constituencies.

This is not the place for me to draw up a list of everything that must be overhauled, but I will nevertheless give a few telling examples of the scale of the challenge ahead, as we must indeed learn to think differently.

(1) City planning regulation as we know it dates back to the end of the 1960s. It primarily deals with new constructions, whereas renovation work on the existing stock is essentially governed by the 1988 Sekler case-law,[6] which prompted the French Council of State to deliver the following ruling: “The circumstance that an existing construction does not conform with one or more provisions of a duly approved land use plan (plan d’occupation des sols) does not preclude, in the absence of provisions in this plan that are specifically applicable to the modification of the existing buildings, the subsequent issuance of a building permit, when concerning works which are either intended to bring the building more in line with legal provisions that were disregarded or that are alien to these provisions.”[7] Under the ruling, the French Council of State draws a distinction between two possibilities: either the local planning document (plan local d’urbanisme) has introduced specific arrangements for existing constructions which do not comply with the planning regulations, or only those works that are alien to the rules, disregard them, or improve the conformity of the construction to these rules are authorized. In practice, most urban local planning documents refer only to the terms of the Sekler ruling. Only a few of them have seized the opportunity afforded by the Council of State and, when they have, only very marginally so. We cannot help but notice that the provisions of the French urban code regarding the content of town planning documentation were originally intended to govern new construction, as opposed to the renovation of existing structures.

In addition, urban planning law is primarily grounded in rules that are applied to the land unit.[8] This makes increasingly less sense and can, in fact, be counterproductive. Town planning has to be considered at the scale of the urban block or district in order to promote pooling and optimize actions when necessary.[9]

As in urban planning law, the main tools available in real property and construction law concern new builds. To date, there has been no substantive consideration given to contracts that promoters could offer to private individuals with a view to renovating their homes comprehensively at the city block scale. Furthermore, construction standards haven’t yet undergone reinvention in order to adapt them to existing buildings.

(2) Massifying the transformation of the existing housing stock requires real estate professionals and the construction industry to take interest and to start investing. It will require retrofits, actions, and solutions to be thought up at the urban block or district level, whereas the transformation of the existing stock is still largely approached at the residential or joint-ownership property level. Scaling up is also in the interest of the owners of the various buildings in a district, as they could then pool their resources in order to develop a project together. For instance, when it is necessary to undertake heavy maintenance work, this community of interest becomes a solution that improves conservation measures and generates cost savings; the same holds when the technical or architectural coherence favors looking for a joint solution, or when there are various pre-existing ties between them (shared spaces for instance). The pooling of needs when undertaking transformation work makes it possible to benefit from centralized administrative monitoring or to achieve economies of scale (in procurement, supplies, or waste management). By associating all the users within a district (homeowners, tenants, occupants), the pooling of services such as shared concierge services can help reduce building maintenance costs by centralizing interventions, revitalize local activities, foster exchange between residents, and improve quality of life among users. Finally, private resources (vacant spaces, gardens, collective terraces in the spaces between buildings, communal rooms that can be rented, etc.) can be pooled in order to address the new challenges facing the environment and society in a more comprehensive manner.

At-scale action is critical to ensure that we successfully and comprehensively transform the existing stock.[10] This therefore requires substantially revisiting our practices. It is necessary to invent new systems for cooperation between private homeowners and joint property owners based on, for example, the model of shared courtyards. New project management systems or new governance structures that enable us to go beyond single properties must also be set up.

(3) Finally, massifying the transformation of the existing housing stock requires the presence of an orchestration of some kind. There is no such thing as the spontaneous generation of property owners collectively deciding in a coordinated fashion to work together. It is crucial that this transformation be driven forward, supervised, and coordinated by cities and ad hoc services that have access to the appropriate tools and necessary expertise.

That is what the urban development of tomorrow looks like.

According to Article L.300-1 of the French urban planning code, however, the purpose of a “development operation or action […] [is to] implement an urban project, a local housing policy, organize the maintenance, extension or set-up of economic activities, foster the development of leisure and tourism, create [community amenities], combat [unsanitary conditions], enable urban renewal and safeguard or showcase heritage, whether developed or undeveloped, as well as natural spaces, in particular by seeking to optimize the use of urbanized spaces and spaces slated for urbanization.” This legal text, though amended by the new Climate and Resilience Law, clearly falls short of the challenges we are facing. The same applies to all the tools used for town planning, which were mainly designed towards the end of the 1960s to carry out new builds on undeveloped land.

Rethinking town planning around the existing housing stock implies setting up a suitable governance system, competent stakeholders, new operative tools, and, above all, identifying a new economy. This is incredibly ambitious and demanding, but also critically important.

It is crucial to completely overhaul the legal framework we are operating in, but this isn’t enough in itself. Getting both real estate professionals and private owners to change their practices will also prove necessary.[11]

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1. Luc Broussy, « Nous vieillirons ensemble… » 80 propositions pour un nouveau pacte entre générations. Rapport interministériel sur l’adaptation des logements des villes, des mobilités et des territoires à la transition démographique [“We Shall Age Together…” – 80 Proposals for a New Intergenerational Pact. Interministerial Report on Adapting Housing in Cities, Mobilities, and Territories to the Demographic Transition], May 2021. See in particular chapter 1 (Un logement adapté : la condition pour vieillir “chez soi” ) [Adapted Housing: The Prerequisite for Aging “At Home”].
2. These points were made in the highly comprehensive survey by Hugues Périnet-Marquet, “Diagnostics et audits énergétiques après la loi climat et résilience” [Energy Diagnostics and Audits Following the Climate and Resilience Law], Construction – Urbanisme, 10(9), October 2021.
3. Commissariat général au développement durable [French General Commissariat for Sustainable Development], Service des données et études statistiques [Statistical Studies and Data department], Le parc de logements par classe de consommation énergétique [Housing Stock by Energy Class], Working Document No. 49, September 2020.
4. All those rated between D and G on the EPC scale.
5. See Hugues Périnet-Marquet, “Diagnostics et audits énergétiques après la loi climat et résilience” [Energy Diagnostics and Audits Following the Climate and Resilience Law], Construction – Urbanisme, 10(9), October 2021.
6. Conseil d’État [French Council of State], Section of May 27, 1988, Sekler, No. 79350 ; see also Étienne Fatôme, « Les règles d’urbanisme de fond relatives aux travaux sur existants » [Town Planning Rules Relating to Retrofits], Revue de droit immobilier – RDI, 4 (2000): 429.
7. Élise Carpentier and Michèle Raunet, “Les travaux sur construction existante en droit de l’urbanisme” [Retrofits in Urban Planning Law], Annales des loyers, 7–8 (July–August 2021): 25.
8. Contiguous urban block composed of one or several plots belonging to a single owner or forming a jointly held property.
9. For more on this, see Apur, Grammaire pour une ville neutre en carbone et résiliente [Grammar for a Resilient and Carbon-Neutral City] (Paris: Observatoire de la ville durable, April 2019).
10. Based on this assessment, since 2016 the City of Paris has involved several partners in reflections on the future developments relating to the design, construction, and monitoring of real estate projects. The “Ville intelligente et durable” (Smart and Sustainable City) mission brought together various stakeholders involved in real estate, including Groupe Icade, in an ad hoc committee marshalling Caisse des Dépôts, Paris Habitat, Foncia IPM, Efficacity, and the Parisian Climate Agency (APC). This working group has started drawing hypotheses and formulating recommendations on the kind of governance that should be established in order to address the new environmental concerns throughout the entire service life of the building.
11. For further details, see the Manifesto for the Creation of an International Panel on Behavioral Change (https://gieco-ipbc.org/en/).

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Michèle Raunet
Michèle Raunet, associate notary, co-directs the Property Development  of Cheuvreux study arm of the group and, with her teams, she hads developed particular expertise in property law, city planning, social housing regulation, public property law, and public procurement law.
Michèle Raunet is also leading legal thinking, knowledge management, as well as research and development within the Group and heads its scientific committee.
In 2019, she was appointed as a member of the Scientific Council of the GRIDAUH research group, as well as associate professor at Aix-Marseille University.