The year 2025 marks significant changes in the French real estate market. The government aims to simultaneously support buyers, stimulate construction, strengthen energy efficiency requirements, and limit the number of short-term rental properties.
For property owners, tenants, and investors, this means new rules of the game: from changes in the LMNP tax regime to Airbnb reform and new credit conditions.
Below we have gathered the key initiatives shaping the future of the French real estate market.
1. Modification of taxation for furnished rentals (LMNP)
According to the 2025 Finance Law, for properties rented under the LMNP scheme (Location Meublée Non Professionnelle), depreciation will no longer be ignored at the time of sale: it must now be reintegrated into the calculation of the taxable capital gain (plus-value).
Before the 2025 reform:
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The owner rented out the property under LMNP (Location Meublée Non Professionnelle — furnished rental without “professional” status).
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This regime offered an attractive system: the owner could depreciate the value of the property and furniture (annually deducting part of the value as “wear and tear”), reducing taxable rental income.
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Upon sale, depreciation was not considered, and the capital gain was calculated simply as the difference between purchase price and sale price.
Result: investors benefited twice:
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They paid less tax on rental income
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At the time of sale, the “full” purchase price was used without deduction for depreciation, minimizing capital gains tax.
What changes in 2025:
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Depreciation will now be included when calculating the taxable base upon sale.
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Example: if an apartment was purchased for €500,000 and €100,000 was depreciated over several years, the tax authorities will now consider the property’s adjusted cost as €400,000.
If sold for €600,000, the capital gain is calculated as:
Previously: €600,000 – €500,000 = €100,000 (taxable base).
Now: €600,000 – €400,000 = €200,000 (the taxable base doubles).
2. Extension and expansion of PTZ and Loc’Avantages
The Prêt à Taux Zéro (PTZ) program has been extended until the end of 2027, with its geographic coverage expanded nationwide, including “remote areas.” The Loc’Avantages scheme, designed for landlords renting at affordable rates under agreements with Anah, has also been extended for 3 years.
This is a government program supporting homebuyers, first launched in 1995.
How it works:
- The government subsidizes the interest rate — effectively, the loan is granted at 0% interest.
- However, PTZ never covers the entire purchase. Usually, it finances 20–40% of the property’s value, with the rest requiring a standard bank loan and/or personal contribution.
- Repayment of the PTZ starts after a deferment period, with terms up to 25 years.
What changed in 2025:
- The program has been extended until the end of 2027.
- Geographic expansion: the loan is now available not only in major “high-demand” cities (zones tendues) but also in smaller towns and rural areas (“remote zones”).
- This aims to support purchasing power amid rising prices and stimulate demand in less attractive regions.
For buyers, this is a real help when acquiring a first home, as it reduces debt burden and saves on interest.
Loc’Avantages
Introduced in 2022, this program is managed by Anah (Agence nationale de l’habitat).
- tax benefits (rental income tax reduction up to 65% for large rent discounts);
- potential subsidies for renovation or modernization works.
For landlords – an opportunity to optimize taxes and reduce vacancy. For the state – a tool to expand the supply of “affordable housing” without new construction.
3. Changes in building rights (surélévation)
The exemption from capital gains tax when transferring the right to build additional floors (surélévation) has been extended until December 31, 2026, provided the new space is exclusively for residential use.
What is the right of surélévation:
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The owner of a building has the right to add extra floors on top.
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Sometimes the owner cannot or does not wish to develop, and may sell or transfer this right to another investor or developer.
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Legally this is called cession de droit de surélévation — transfer of building rights.
- Any transfer of a property right (including building rights) is treated as a property sale.
- The profit from such a sale is subject to capital gains tax (plus-value immobilière).
- Example: if you sold the right to add floors for €100,000, and acquired it for €0 (as part of land ownership), the entire sum could be taxed.
What changes:
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The government seeks to encourage urban densification, creating more housing without expanding into agricultural or green land.
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A tax exemption applies: if an owner sells the surélévation right, they are exempt from capital gains tax.
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In 2025, this exemption has been extended until December 31, 2026.
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A building owner can sell the right to add floors to a developer and receive the full amount tax-free.
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For developers, this opens opportunities to create new apartments “on rooftops” without purchasing new land.
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For the state, it is a tool to tackle the housing crisis, especially in big cities where land is scarce but demand is high.
4. New energy efficiency obligations (DPE)
France continues to tighten housing energy efficiency regulations. The goal is to reduce emissions, lower energy consumption, and phase out so-called “passoires thermiques” (poorly insulated housing). Starting January 1, 2025, new requirements affect both rental and sales.
- DPE disclosure in rental contracts – Every new lease must state the property’s energy performance class (A to G).
- Mandatory energy audit for class E housing – Upon sale, an audit is required so the buyer knows future renovation costs, and the seller must consider this when pricing.
Gradual rental ban on low-efficiency housing:
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Class G: already banned for rental (since 2023).
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Class F: ban effective 2028.
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Class E: ban effective 2034.
Thus, more owners will be required to renovate or their properties will exit the rental market.
5. Credit conditions
- In 2023–2024, rates reached record highs of 4.5–5%, severely limiting mortgage affordability.
- In 2025, thanks to falling inflation and European Central Bank (ECB) policy, rates dropped to 3.2–3.5%.
For buyers, this means:
- lower monthly payments,
- increased budget capacity,
- market revival after the 2022–2023 slowdown.
Debt-to-income limits (taux d’endettement):
- Bank of France rule: debt repayments must not exceed 35% of household income.
- Banks must comply, but may waive it in 20% of cases (e.g., wealthy clients).
- This restriction remains in 2025 to avoid overheating the market.
Personal contribution (apport personnel):
- Banks require 10–20% personal funds for the project.
- The higher the down payment, the better the loan terms (rate, insurance, approval).
Impact on the market:
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Buyers: improved affordability, more transactions.
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Sellers: renewed demand may gradually stabilize prices.
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Investors: mortgages once again become a tool for rental investment projects.
6. Stricter taxation of short-term rentals (Airbnb and similar platforms)
For years, renting through Airbnb and similar platforms was one of the most profitable strategies for owners, as tax benefits significantly reduced taxable income. Since January 2025, the situation has changed.
Reduction of tax allowances (micro-BIC):
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For non-classified rentals (“regular Airbnb”), the tax deduction is reduced from 50% to 30%, with the income cap lowered to €15,000.
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For classified tourist rentals (meublé de tourisme classé), the deduction is cut from 71% to 50%, with the income ceiling lowered from €188,700 to €77,700.
Increased tax burden: for most landlords, taxes rise by 40–80%, in some cases nearly doubling.
Government revenue impact: the Finance Ministry estimates an additional €200 million per year.
Market consequences:
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For owners — lower net profit, requiring careful choice between simplified taxation and the more complex réel regime (where real expenses can be deducted).
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For tourist areas — reduced attractiveness of short-term rentals may return some apartments to the long-term market, improving housing availability for residents.
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For investors — projects focused solely on short-term rental become less profitable and require new business models.
Conclusion
In 2025, the government’s real estate policy seeks balance: promoting affordable housing, modernizing the existing stock, curbing price growth, and encouraging a return to long-term rentals. For investors and buyers, these are both challenges and opportunities. A strong understanding of tax rules, financing conditions, and energy efficiency will be key to successful transactions.
