Since January 1, 2025, a major regulation has reshaped the French real estate landscape: properties classified as G, labeled as "energy sieves," can no longer be rented. This disruption directly affects over 600,000 properties, a significant portion of which are located in Île-de-France, home to the five most impacted cities. While the ecological goal is ambitious—eliminating 10% of greenhouse gas emissions from the building sector—it also represents a strategic opportunity for the banking industry.
With an average renovation cost of €40,000 per property to meet energy standards, the financing needs amount to €43 billion for G-rated properties alone, soaring to €100 billion when including F-rated homes. This complex equation requires the joint mobilization of the government, banks, and property owners.
A Massive Effort Requiring Cooperation Between the State and Banks
To encourage energy renovation, the government is deploying several measures:
- Strict regulations: Property owners who fail to carry out renovations face penalties, such as rent reductions or lease suspensions.
- Financial incentives: Through programs like MaPrimeRénov’ (with a €2.3 billion budget for 2025), eco-PTZ loans, and a reduced 5.5% VAT, the state subsidizes part of the costs.
- Price signaling: Rising energy prices make the potential savings from renovations more attractive.
However, these measures alone are not enough. Banks, as financial partners of property owners, have a key role to play in this transformation. They can provide dedicated financing solutions and offer support services through specialized partnerships to guide clients in their energy renovation projects.
Why Is Renovation Still a Challenge?
Despite these efforts, actual investments remain far below the required levels. Many property owners prefer selling their assets rather than renovating them—sometimes at a loss. Several factors contribute to this paradox:
Government programs have several limitations. First, they lack clarity and stability. For example, in 2023, €300 million allocated to MaPrimeRénov’ remained unused due to complex, poorly publicized processes and restrictive criteria.
Additionally, a shortage of qualified contractors is a major obstacle: only 11% of construction companies hold the RGE ("Recognized Environmental Guarantor") certification, which is essential for accessing grants but is costly and difficult to obtain.
Finally, expected energy savings remain uncertain. According to France Stratégie, less than half of private homes would see a positive return on investment (ROI) within 30 years after upgrading to an A-rated energy performance certificate (DPE). This discourages ambitious projects, even though they are crucial for transforming the housing market.
On the banking side, several challenges persist as well. Existing financing solutions often fall short, covering only part of the necessary costs due to loan amounts or durations that are insufficient. Currently, 50% of renovations are self-financed, and dedicated renovation loans typically have terms of less than 10 years, while the ROI often exceeds 20 years.
Moreover, the customer journey remains fragmented. Despite partnerships with renovation specialists, these services are not always well integrated into banking processes. Geographic coverage is uneven, offers are not prominently displayed on banks’ digital platforms, and the customer experience suffers as a result.
Moreover, the customer journey remains fragmented. Despite partnerships with renovation specialists, these services are not always well integrated into banking processes. Geographic coverage is uneven, offers are not prominently displayed on banks’ digital platforms, and the customer experience suffers as a result.
Banks Have Levers to Pull, Including AI and Green Securitization
To turn these challenges into opportunities, banks can explore several strategic avenues:
1. Adapting financing solutions
Offering long-term, preferential loans for ambitious renovations could make these projects more accessible. Competitive interest rates, flexible repayment terms, and tailored guarantees would help mitigate risks for banks while encouraging more clients to undertake renovations.
2. Streamlining customer journeys
Banks could collaborate with multiple certified contractor networks, without exclusivity, to provide end-to-end support, including energy audits, quotes, and project tracking. By acting as orchestrators, banks could offer the most suitable solutions for each client's needs.
3. Leveraging artificial intelligence and data
Banks could use public databases to identify energy-inefficient properties and proactively offer tailored financing solutions to property owners. Additionally, missing energy performance diagnostics (DPE) could be supplemented using predictive models, providing accurate estimates of renovation costs and potential energy savings.
4. Promoting green securitization
Transforming renovation-related assets into tradeable securities on financial markets would free up resources to fund new projects while meeting ESG (Environmental, Social, and Governance) criteria.
Banks Can Achieve Strategic Goals While Driving Sustainability
Investing in energy renovation offers multiple strategic benefits for banks:
- Enhancing green loan portfolios: These projects help align banks’ loan books with climate targets.
- Increasing asset value: Renovated properties see their market value rise, strengthening the quality of underlying loan collateral.
- Attracting new clients: By offering comprehensive and innovative solutions, banks can position themselves as key players in the green transition.
- Reducing financial risks: Engaging in ESG-compliant projects reduces exposure to non-compliant assets.
For property owners, banking support simplifies the process and eases the financial burden of renovations. They also gain more energy-efficient homes, which are both more valuable in the market and more cost-effective in the long run.
The Financial Sector’s Strategic Role in the Energy Transition
Banks are no longer just lenders—they are essential partners in the energy transition. By investing in these projects, they help address a major challenge while unlocking new growth opportunities.
Energy renovation, despite its complexity and costs, presents a unique opportunity for banks to strengthen their position in a rapidly evolving market. By offering tailored solutions and taking on a leadership role, they can turn this challenge into a strategic advantage for the future.
Sopra Steria: A Key Partner in the Energy Transition
Sopra Steria stands alongside banks, playing a pivotal role in the energy transition by leveraging its technological expertise for financial institutions and public organizations. Through data analytics and predictive modeling solutions, Sopra Steria enables the development of customized market offerings. By redesigning and digitizing customer journeys, Sopra Steria simplifies access to financing and accelerates energy renovation, contributing to a more sustainable transformation of the sector.