French Real Estate Laws And Regulations: The Essentials

Published on October 5, 2025 and written by Cyril Jarnias

The French real estate market is renowned for its stability and attractiveness, drawing numerous domestic and international investors. However, it is governed by a complex set of laws and regulations that are regularly updated. In 2025, several major changes were made to French real estate legislation, significantly altering the landscape for property owners and investors. This article provides an overview of the key provisions you need to know to navigate French real estate with confidence.

France: A Country Open to Foreign Investors

France remains one of the most sought-after destinations for international real estate investment. Foreigners, whether EU nationals or from third countries, enjoy the same rights as French citizens regarding property acquisition. This openness of the French market to foreign investors is a major asset for the country’s appeal.

However, it’s important to note a few specificities:

• Non-residents can freely purchase real estate in France, whether for personal use or rental purposes.
• No special authorization is required for foreigners wishing to acquire property in France.
• Real estate transactions involving non-residents are subject to specific reporting obligations to the French tax authorities.

This openness of the French real estate market to foreign investors contributes to the sector’s dynamism and the diversity of buyer profiles. However, it is crucial for foreign investors to thoroughly understand the specifics of the French legal and tax framework before embarking on an acquisition.

The French Real Estate Legal Framework: Balancing Protection and Regulation

French real estate law is known for its complexity and protective nature, both for property owners and tenants. In 2025, several foundational laws continue to shape the real estate landscape:

1. The ALUR Law (Access to Housing and Renovated Urban Planning)

Adopted in 2014 and regularly updated, this law aims to regulate rental relationships and control rents in high-demand areas. In 2025, its application was extended to new urban areas, thereby strengthening tenant protection.

2. The Climate and Resilience Law

This law, enacted in 2021, has major implications for the real estate market in 2025. It imposes strict energy performance standards for housing, with the gradual prohibition of renting “thermal sieves.” Starting in 2025, properties rated G on the Energy Performance Diagnostic (DPE) can no longer be rented out.

3. The SRU Law (Solidarity and Urban Renewal)

This law, which mandates a quota of social housing in certain municipalities, was strengthened in 2025. Cities not meeting these quotas now face heavier financial penalties, which can influence local urban planning policies and, consequently, the local real estate market.

4. The Lagleize Law

Adopted in 2024 and applicable from 2025, this law introduces a new concept of property by separating land from buildings. It allows buyers to acquire only the building while leasing the land from the municipality for a maximum period of 99 years. This measure aims to reduce the acquisition cost of housing in high-demand areas.

These laws, among others, form a complex yet protective legal framework for French real estate market players. They aim to ensure a balance between the rights of property owners and tenants, while promoting a more sustainable and accessible housing stock.

French Real Estate Taxation: An Evolving System

Real estate taxation in France is a complex field that has undergone many changes in recent years. In 2025, several tax provisions directly impact property owners and real estate investors:

1. The Real Estate Wealth Tax (IFI)

Introduced in 2018 to replace the ISF, the IFI continues to apply in 2025 to net real estate assets exceeding €1.3 million. The progressive scale remains unchanged, with rates ranging from 0.5% to 1.5%. However, the 2025 Finance Law introduced a new cap limiting the total amount of IFI and income tax to 75% of the taxpayer’s income.

2. The Property Tax

In 2025, the property tax reform, initiated in 2021, is fully effective. Rental values have been reassessed, leading to a significant increase in this tax in many municipalities. Furthermore, local authorities now have more flexibility to adjust rates, which can create significant disparities between regions.

3. Real Estate Capital Gains

The taxation regime for real estate capital gains was modified by the 2025 Finance Law. The reduction for length of ownership was revised downward, increasing the tax on sales of properties held for a long time. For example, full exemption now only occurs after 30 years of ownership, compared to 22 years previously.

4. The Pinel Scheme

Although still in effect in 2025, the Pinel scheme has been gradually reduced. The tax reduction rates have been lowered and eligibility conditions tightened, particularly regarding the energy performance of homes. Nevertheless, this scheme remains a tax incentive tool for rental investment in new properties.

5. VAT on Energy Renovation Work

As part of the ecological transition policy, the 2025 Finance Law extended the reduced VAT rate of 5.5% to a wider range of energy renovation work. This measure aims to encourage property owners to improve the energy performance of their properties.

These tax developments reflect the authorities’ desire to regulate the real estate market while encouraging certain behaviors, particularly in energy renovation and rental investment. It is crucial for property owners and investors to understand these tax mechanisms to optimize their wealth strategy.

Property Owners’ Rights and Obligations: A Subtle Balance

In France, property owners’ rights are guaranteed by the Constitution, but they are also governed by numerous legal obligations. In 2025, this balance between rights and duties remains at the heart of real estate legislation:

1. The Right of Ownership

The right of ownership remains a fundamental right in France. Property owners have the right to use, enjoy, and dispose of their real estate as they see fit, within the limits set by law. However, this right can be limited by the public interest, as is the case with urban planning rules or public utility easements.

2. The Right to Rent

Property owners have the right to rent out their property, but this right is governed by many rules, particularly regarding leases, rent, and charges. In 2025, restrictions on renting energy-inefficient homes (rated F and G) are fully in effect, thus limiting the right to rent for some property owners.

3. Safety and Habitability Obligations

Property owners are obligated to maintain their property in good condition and guarantee the safety and habitability of the dwelling. In 2025, these obligations were strengthened, particularly regarding risk prevention (asbestos, lead, etc.) and energy performance.

4. Condominium Obligations

For condominium owners, the law imposes specific obligations, including participation in common charges and compliance with the condominium regulations. The ELAN law of 2018, whose effects are fully felt in 2025, strengthened the powers of the managing agent and facilitated decision-making for improvement works.

5. Preemption Right

The urban preemption right, which allows local authorities to acquire a property put up for sale as a priority, remains in effect in 2025. However, the 2025 Finance Law introduced new exceptions to this right, particularly to facilitate certain family transfers.

These rights and obligations outline a complex yet balanced framework, aiming to protect both the interests of property owners and those of the community. It is essential for any property owner or future owner to understand these rules to fully exercise their rights while respecting their legal obligations.

Recent Regulatory Developments: Towards More Sustainable and Accessible Real Estate

The regulatory landscape of French real estate is constantly evolving. In 2025, several major changes were introduced, reflecting political priorities in housing, environment, and regional planning:

1. Strengthening of Energy Standards

The Climate and Resilience Law introduced a strict schedule for the gradual elimination of “thermal sieves.” In 2025, homes rated G on the DPE are banned from rental, and this ban will extend to homes rated F in 2028. This measure strongly encourages property owners to undertake energy renovation work.

2. New Regulation on Short-Term Rentals

In response to the proliferation of Airbnb-type rentals, a new law adopted at the end of 2024 tightened the conditions for short-term rentals in high-demand areas. Property owners are now limited to 90 days of rental per year (compared to 120 previously) and must obtain specific authorization from their condominium.

3. Reform of Condominium Law

The ELAN law, whose effects are fully felt in 2025, simplified decision-making in condominiums. The required majorities for certain works, particularly those related to energy renovation, were lowered, thus facilitating the implementation of improvement projects.

4. Extended Rent Control

Rent control, experimented with in several major cities, was extended to new urban areas in 2025. This measure aims to limit rent increases in areas where the rental market is particularly tight.

5. New Homeownership Assistance Scheme

Replacing the PTZ (Zero-Interest Loan), a new homeownership assistance scheme was implemented in 2025. This more targeted scheme favors the acquisition of energy-efficient homes and is adjusted based on the buyers’ income.

6. Reform of Furnished Tourist Accommodation Taxation

The 2025 Finance Law introduced new taxation for furnished tourist accommodations, aiming to reduce the tax advantage these rentals had compared to unfurnished rentals. This measure seeks to rebalance the rental market in tourist areas.

These regulatory developments reflect a strong political will to transform the French real estate stock to make it more sustainable, more accessible, and better adapted to contemporary challenges. They impose new constraints on property owners and investors but also open up new opportunities for those who can adapt to this new context.

Real estate in France in 2025 is characterized by a complex but constantly evolving legal and tax framework. Recent reforms demonstrate a desire to modernize the real estate stock, make it more accessible, and more environmentally friendly. For property owners and investors, these changes represent both challenges and opportunities.

The key to success in this new real estate landscape lies in a good understanding of the rules in force and anticipating future developments. It is more necessary than ever to stay informed regularly and surround yourself with competent professionals to navigate this complex environment.

Despite these challenges, the French real estate market remains attractive, both for residents and foreign investors. Its stability, the quality of its real estate stock, and the prospects for long-term appreciation make it a prime destination for real estate investment.