⚠️ Article updated on 12 June 2026: the electricity conversion factor dropped from 2.3 to 1.9 on 1 January 2026 (order of 26 August 2025) — check the actual 2026 rating of an electrically heated property before calculating the purchase discount. For the complete 2026 renovation strategy and the costed case study, see our guide property dealers and DPE 2026: the renovation strategy.
You buy a G-rated building at 40% below the market value of an equivalent renovated property. You renovate it. You resell it. In theory, the margin is obvious. In practice, four parameters have fundamentally changed since 2021 and alter the profitability calculation of every operation: the EPC (Diagnostic de Performance Énergétique, France's energy performance certificate) is now legally binding on the end buyer, rental bans create seller pressure that widens discounts but complicates resale to investors, the works thresholds determining reduced VAT rates have been clarified, and the green value premium after renovation is now quantified by notaries with sufficient precision to be integrated into a pro forma balance sheet.
This article examines the four dimensions where the EPC is restructuring marchand de biens (professional property dealer) operations: the analysis of the acquisition discount, the impact of renovation obligations on the operation balance sheet, the applicable tax regimes depending on the nature of the works, and the resale valuation based on the EPC class achieved.
Net margin of €65,795 after corporate tax — this is the simulated result of an operation on a G-rated building of 4 units in Lyon, renovated to class B and resold unit by unit. Full balance sheet breakdown in this article.
Are You Affected? Urgency by Operation Profile
| Operation Profile | EPC Impact | Urgency |
|---|---|---|
| Acquisition of a G-rated property for resale to investor | Resale difficult without works — investor can no longer let | Critical |
| Acquisition of an F-rated property for resale in 2026–2028 | 2028 letting ban: investor buyer under pressure | High |
| Heavy renovation with change of use | 5.5% or 10% VAT depending on works nature — to be qualified from the balance sheet stage | High |
| Resale of a renovated A- or B-rated property | Documented green value: defensible price argument for the notary | To exploit |
| E-rated property in a high-demand area | Rental pressure not yet present but market discount already visible | Monitor |
The Acquisition Discount: Quantifying What the EPC Actually Changes
Why seller pressure has intensified since 2025
1 January 2025 marked the entry into force of the ban on re-letting G-rated properties. An important point for acquisitions where a tenant is in place: a lease signed before this date on a G-rated property continues until its contractual term, but as soon as the tenant vacates, any new letting is prohibited. The landlord holding a tenanted G-rated property knows their asset will become unproductive at the first tenant departure — without being able to plan this date precisely. For those who cannot finance the works, selling to a marchand de biens (property dealer) is often the only immediate liquid exit.
This structural seller pressure creates a favourable acquisition context for dealers — provided they correctly quantify the real discount relative to the renovated value. In particular, a tenanted G-rated property in 2025 is worth less than a vacant G-rated one: the sitting tenant temporarily protects the income but makes works more complex to organise and resale to an investor more difficult.
The discount on a G- or F-rated property is not uniform. It depends on four parameters:
Location. In high-demand areas (Paris, Lyon, Bordeaux, major cities), post-renovation rental demand is strong and the resale market deep — the acquisition discount is at its maximum because the owner knows they will not easily find a buyer themselves, but the post-renovation value is high. In lower-demand areas, the discount may be smaller but the post-renovation value is too — the margin is tighter.
The actual class and the cost of upgrading. A 15% discount on a G-rated property whose renovation costs 25% of the final value is not an opportunity — it is a trap. The relevant calculation is not the gross discount but the gap between acquisition price + works + fees and post-renovation resale value.
The letting status at the time of acquisition. A tenanted G-rated property: the lease continues until its term, but re-letting will be impossible without works. The market value of a tenanted G in 2025 is lower than a vacant G — contrary to the usual logic of the rental market where a tenanted property sells at a slight premium.
Size and divisibility. A G-rated building of 6 units bought as a block is often more discounted than an individual flat, because the pool of block buyers is smaller. For a dealer, the operation of dividing and reselling unit by unit after renovation can generate a subdivision premium that adds to the post-renovation green value.
Notarial data on the EPC discount
Notarial studies on the green value of housing (Notaires de France, 2024 report) quantify the price differences between EPC classes for the same type of property, under comparable market conditions:
| Class Gap | Observed Discount (major cities) | Observed Discount (medium cities) |
|---|---|---|
| D → F | −8% to −12% | −5% to −8% |
| D → G | −13% to −18% | −8% to −13% |
| C → A/B | +3% to +8% | +2% to +5% |
| F → A/B (after renovation) | +20% to +30% on the F value | +15% to +22% |
Simulate the class improvement and available grants
The OneDpe renovation simulator calculates the EPC class improvement based on planned works and available grants (CEE) — the key input for closing your pro forma balance sheet before acquisition.
The Operation Balance Sheet: Integrating the EPC from the Sourcing Phase
The property dealer balance sheet structure with EPC
A property dealer operation balance sheet on an energy-inefficient property includes specific items that balance sheets on unconstrained properties do not show:
On the debit side:
- Acquisition price (EPC discount integrated)
- Acquisition costs: reduced transfer duties if resale commitment within 5 years (CGI article 1115) or full rate depending on strategy
- Cost of energy renovation works (insulation, heating, ventilation) — to be costed with quotes before commitment
- Grants deductible from gross works cost: CEE premiums (accessible to property dealers) — note: MaPrimeRénov'' is not accessible in a pure buy-resell operation, see FAQ
- Financial costs: dealer loan interest, holding costs
- Marketing costs at resale (agent, notary)
- Tax on profits depending on legal structure (corporate tax for companies, BIC for individuals)
On the credit side:
- Post-renovation resale value, integrating the EPC premium (class A or B vs initial class F)
- Possible subdivision premium if resold unit by unit
- Rent received during the holding period if the property is partially occupied and the occupied units are legally lettable
The key ratio to monitor: gross margin / total operation cost ≥ 15–20% to absorb construction contingencies, resale delays and tax on profits.
The resale commitment and reduced transfer duties
A property dealer who acquires a property committing to resell within 5 years benefits from the reduced transfer duty rate of 0.715% (land registration tax + assessment fees), instead of the full rate of 5.80% in most départements — the rate varying according to the departmental additional tax, set between 3.80% and 4.50% depending on the local authority (CGI article 1115). For a property acquired at €400,000, the saving is €20,340 — a significant item in the balance sheet.
This 5-year resale commitment is compatible with a complete renovation operation before resale. However, it requires planning discipline: if works overrun and the resale occurs after the 5-year deadline, the reduced duties are reclaimed with late payment interest (0.20% per month). The deadline runs from the date of the notarial acquisition deed — not from the end of works.
⚠️ Warning: If the resale occurs after the 5-year deadline, the reduced transfer duties are reclaimed with late payment interest of 0.20% per month. The deadline runs from the date of the notarial acquisition deed — not from the end of works. Plan the operation timeline accordingly.
Works Taxation: Reduced VAT, Deductibility and the Dealer Regime
VAT on works: three rates depending on the nature of works
This is the most structuring tax point for the property dealer renovating an energy-inefficient property. Three regimes coexist:
5.5% VAT — energy performance improvement works (CGI article 278-0 bis A).
This rate applies to works on materials and equipment that directly contribute to improving the energy performance of a property completed more than 2 years ago: thermal insulation (walls, roof, floors), installation or replacement of high-performance boilers, heat pumps, double-flow mechanical ventilation, high-performance double glazing. It applies to both labour AND materials, provided the works are invoiced by an RGE-certified professional. The property dealer benefits from this rate like any project owner — it is not reserved for owner-occupiers.
10% VAT — improvement, conversion and fitting-out works (CGI article 279-0 bis).
This rate applies to general renovation works on properties completed more than 2 years ago that do not qualify for the 5.5% rate: secondary works (plumbing, electrical, plastering, tiling), interior fitting-out, rendering without insulation. The boundary between 5.5% and 10% lies in the nature of the works — rendering alone is at 10%, rendering with external wall insulation qualifies for 5.5%.
20% VAT — works treated as new construction (CGI article 257 I).
If the works are so extensive that they constitute a total reconstruction for property VAT purposes, the full rate applies. The threshold is reached when works affect the majority of the building''s fundamental elements (foundations, structural frame, facades excluding rendering, all floors). This case-law criterion is distinct from the planning threshold triggering a building permit: a dealer may be in a 20% VAT situation without being subject to a building permit, and vice versa. The qualification must be made with a tax adviser before committing to structural works — a retroactive reclassification as new build generates a VAT reassessment on the entire operation.
Works deductible from the dealer''s taxable profit
The property dealer is taxed on their operating profits — under the BIC regime (bénéfices industriels et commerciaux, business income) for individuals and partnerships, under the IS regime (impôt sur les sociétés, corporate tax) for capital companies (SAS, SARL subject to IS). In both cases, works carried out on properties intended for resale are deductible operating expenses from taxable profit — they are not capitalised as they would be in a property holding company.
This immediate deductibility is a significant advantage: an €80,000 works programme on a property bought and resold in the same financial year reduces taxable profit by €80,000 — with a tax saving at the applicable rate (IS 15% or 25% depending on brackets for companies; income tax at the marginal rate for individuals).
Key takeaway: If the property is resold as a new building (property VAT), the dealer collects 20% VAT on the resale price and can recover the VAT paid on works. If the property is resold as existing housing (no VAT), works are deductible as expenses but the VAT paid on works remains a non-recoverable cost — it adds to the ex-VAT cost in the balance sheet.
Simulation: Operation Balance Sheet on a G-Rated Building
Profile: Rental building, 4 × T2 flats, 200 m² total habitable floor area (4 × 50 m²), Lyon 7th arrondissement, built in 1952, rated G (average consumption: 445 kWh PE/m²/year). Acquisition price: €480,000 (estimated discount of 18% vs equivalent renovated value). Structure: SAS subject to corporate tax, qualifying as SME (turnover < €10M, 75% owned by individuals). Resale commitment within 5 years (CGI article 1115). Pure buy-resell operation — MaPrimeRénov'' not applicable, only CEE premiums are mobilised.
| Item | Amount |
|---|---|
| Acquisition price | €480,000 |
| Reduced transfer duties (0.715%) | €3,432 |
| Energy renovation works (insulation + collective heat pump + mechanical ventilation) | €95,000 ex-VAT |
| VAT on energy works (5.5% on 70% of works = €66,500 ex-VAT) | €3,658 (non-recoverable — resale as existing) |
| VAT on secondary works (10% on 30% of works = €28,500 ex-VAT) | €2,850 (non-recoverable) |
| Estimated CEE premiums (only grant accessible in buy-resell) | −€8,000 |
| Financial costs (dealer loan 12 months at 5% on €400,000) | €20,000 |
| Marketing costs at resale (3% × €700,000) | €21,000 |
| Total costs | €617,940 |
| Item | Amount |
|---|---|
| Estimated unit value T2 50 m² class B, Lyon 7th | €175,000 |
| Total resale value (4 units) | €700,000 |
| Gross margin before corporate tax | €82,060 |
| Gross margin / total cost | 13.3% |
| SME corporate tax (15% on first €42,500 + 25% on €39,560) | €6,375 + €9,890 = €16,265 |
| Net margin after corporate tax | €65,795 |
Note on corporate tax: The reduced 15% rate applies to SMEs on the first €42,500 of profit (CGI article 219 I b). The balance is taxed at 25%. For an SAS whose sole operation for the financial year is this one, the taxable profit is the gross margin of €82,060 — hence the two-bracket taxation.
Simulate the profitability of my operation
The OneDpe profitability simulator calculates the IRR, net margin and cash flow of your buy-resell operations — with integration of CEE premiums and applicable IS or BIC taxation.
Resale Valuation: Exploiting the Green Value
Reselling to an end user vs to an investor
The post-renovation resale target determines the EPC premium that can be captured:
Resale to an end user (primary residence): The buyer is sensitive to the EPC class for comfort and energy cost reasons. Notarial data shows that an A- or B-rated property sells at a premium of 3% to 8% compared to an equivalent C-rated property in major cities. This premium is documentable and defensible in negotiation.
Resale to a buy-to-let investor: The buyer primarily values rental yield and legal security. A turnkey A- or B-rated property delivered after renovation eliminates regulatory risk (no letting ban in a 10-15 year horizon), reduces letting costs (tenant less likely to request works) and facilitates bank financing (no mortgage value discount). These arguments are quantifiable and constitute a defensible price differential.
Block sale to an institutional buyer or social housing provider: For large renovated buildings, a block sale to a social housing provider or property fund requires post-works performance certification (EPC A or B, BBC Rénovation label). This target opens a significant block premium but requires a higher standard of execution and works traceability.
Documenting the green value to defend the price
The EPC premium is documentable via DVF data (Demandes de Valeurs Foncières, accessible on data.gouv.fr) which allows comparison of sale prices for comparable properties by EPC class in the same geographic area. To defend a post-renovation resale price, the dealer should compile a file including: the certified post-works EPC (produced after completion, not a simulation), DVF reference data for the area, and works quotes and invoices tracing the class evolution.
What to check on your balance sheet: Before validating the resale price in your pro forma balance sheet, compile a valuation file including the certified post-works EPC, DVF reference data and works invoices. This file defends your price to the buyer and the notary.
Common Mistakes by Property Dealers Facing EPC Issues
Mistake #1 — Including MaPrimeRénov'' in the balance sheet without checking eligibility. MaPrimeRénov'' is accessible to owner-occupiers and landlords — not to property dealers whose business is buy-resell. A pro forma that includes MPR in a pure buy-resell operation overestimates available grants and underestimates the net cost of works. Only CEE premiums are accessible without occupancy status conditions.
Mistake #2 — Factoring in the EPC discount without costing the actual works. The acquisition discount is visible and immediate; the cost of works is uncertain until firm quotes are obtained. A dealer who acquires based on a 15% EPC discount without precise quotes risks a construction cost that exceeds the discount — turning an apparently profitable operation into a net loss. Quotes should be obtained before signing the preliminary contract or at least before lifting conditions precedent.
Mistake #3 — Ignoring VAT on works in the pro forma balance sheet. The applicable VAT regime (5.5%, 10% or 20%) and the recoverability of this VAT depending on the resale regime (new build vs existing) have a direct impact on the net cost of works. For a €100,000 ex-VAT construction programme entirely invoiced in an existing resale, the non-recoverable VAT represents between €5,500 and €10,000 in additional cost depending on the split between energy and secondary works rates.
Mistake #4 — Underestimating the construction timeline in the holding cost calculation. Complete energy renovation works (insulation, heating, ventilation) take in practice between 4 and 9 months depending on property size and contractor availability. To these timescales must be added administrative delays and post-works marketing periods. An 18-month hold at 5% on €400,000 represents €30,000 in financial costs — an item that optimistic balance sheets tend to minimise.
Mistake #5 — Reselling to an investor without a certified post-works EPC. The investor buying a renovated property to let needs a valid post-works individual EPC for their banking file and letting compliance. A dealer who resells without a certified post-works EPC exposes their buyer to financing refusal or mortgage value reassessment — which can torpedo the transaction or create a post-sale dispute.
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