0% Eco Loan
The 0% Eco Loan is a loan supported by the French government to finance energy-saving works in "old" properties (i.e. built before 1990). The purpose of renovation work done under this program is to reduce energy consumption and greenhouse gases and promote the use of renewable energy sources. In order to ensure that this is the case, the Eco Loan must, except for special circumstances, be used to finance either a "package" of at least 2 renovation actions, or, alternatively, works to improve the overall energy performance of a property, as measured by an licensed expert. The Eco Loan can be granted either to private individuals or, as from January 2015, to a collective body (i.e. the residents association).
The borrower pays neither interest nor administrative fees to the lender. The loan interest is financed by the State which gives the lender a tax credit to make up for the interest payments foregone.
The lender is entitled to require the borrower to take out invalidity and death insurance. It may also require security for the loan, the cost of which is borne by the borrower.
The 0% Eco Loan may also be combined, for a simultaneous first-time purchase, with the provisions of the 0% mortgage (PTZ), which may itself be combined with any other loan, subject to all such loans being compatible with each other.
The Eco Loan may also be combined with the Energy Transition ("transition énergétique") tax credit ("CITE" formerly known as the CIDD).
Lastly (see below), a private individual who has received an Eco Loan can also be a member of a collective body which has received an Eco Loan.
The beneficiaries of the Eco Loan
Individual Eco Loan:
The borrower can be either a physical person or a "société civile immobiliere", a kind of property investment companies (a non-trading company not subject to corporation tax whereby one of the company's shareholders must be a physical person). The borrower must own the property and either occupy it as his main residence, rent it out or put it, at no cost, at the disposal of a third party who occupies it as his main residence (i.e. for at least eight months a year). The property can be a house or an apartment.
Persons applying for the Eco Loan are not means tested.
Originally, only one Eco Loan can be granted per property, even if the owner changes, and regardless of the amount of the Eco Loan granted. However, as from 2016, another Eco loan may complement another, so as to finance more renovation works, and provided it is no later than three years after the first loan.
Collective Eco Loan:
As of January 2015, Residents Associations ("syndicats de copropriété") are eligible for a specific Eco Loan ("éco-prêt copropriétés") of which the purpose is to finance energy renovation work relative to common areas of the property. This loan can be used to finance the same types of renovation work as the Eco Loan granted to private individuals, with however the important difference that this collective Eco Loan can only be used to finance one or more of 6 specific types of renovation actions. Each co-owner is free to participate, or not, in the collective Eco Loan, or to finance his share of the renovation work using alternative funds.
Combining an individual Eco Loan and a collective Eco Loan:
An individual Eco Loan may be granted to a borrower to finance his share of the works decided by the Residents Association of a property jointly owned by one of the borrowers, said works concerning common areas and facilities or private areas accessible to joint owners. If the borrower wishes to have separate works done in his own property at the same time as the works carried out for the Residents Association, such private works may be financed via an individual Eco Loan, up to a ceiling fixed by decree (see "Financial Terms" below). However, should the borrower wish to bring forward or defer the private works in relation to that done to the whole property on behalf of the Residents Association where the borrower is one of the owners, then the two types of works cannot be successively financed by an individual Eco Loan and the owner must choose which work he wants financed by a 0% Eco Loan.
An individual Eco Loan granted as part of an operation concerned by a collective Eco Loan must be taken out within no more than 1 year following the issuing of the collective Eco Loan offer. And, in this specific case, the individual Eco Loan can only be used to finance just one renovation action instead of a "package" of renovation actions. Lastly, the total amount of the 2 loans (i.e., individual Eco Loan and collective Eco Loan) cannot exceed €30,000 in relation to a given property.
The loan may be granted to finance energy-saving work professionally carried out in a property built before 1990 (in mainland France); work must not begin before the loan offer is issued. Since 1 October 2014, the contractors carrying out the renovation work must have the "RGE" label (reconnu garant de l'environnement, a specific label granted to trained contractors).
The work can be:
- a "package" of at least 2 actions from the following 6:
- high-performance thermal roof insulation
- high-performance thermal insulation of external walls
- high-performance thermal insulation of glass façades and doors leading outside
- installation or replacement of high-performance heating systems or domestic hot water equipment
- installation of heating equipment using a source of renewable energy
- installation of domestic hot water equipment using a source of renewable energy;
- or works designed to reduce the building's energy consumption in relation to heating, domestic hot water, air-conditioning, lighting and incidentals. In this case - only for properties in mainland France built after 1 January 1948 - a thermal assessment ("étude thermique") must be done by a professional who will prescribe the work best adapted to the property to achieve the energy consumption objective;
- or work to replace individual drainage systems with equipment which consumes no energy, complying with the technical requirements of the French Local Government Code and selected from the list below:
- septic tank and distribution trenches
- septic tank and shallow distribution bed
- septic tank and filter bed vertically drained through sand
- septic tank and filter bed vertically drained through zeolite
- septic tank and horizontally-drained filter bed
- septic tank and vertical filter bed not drained
- septic tank and infiltration mound
- septic tanks and approved devices.
Specific technical performance standards must be observed in all cases listed above.
Rules for origination
In order to obtain a loan, the applicant must in principle provide the lender with work estimates from a qualified company ("RGE"). Invoices proving that the work have been done must also be provided by the borrower
As from 2016, however, borrower for a property needing renovation may request an Eco loan before having obtained work estimates (so he has a complete financing early on and to facilitate the overall project). The loan will be effectively disbursed later, when work estimates are available.
Amount of the 0% Eco Loan
Individual Eco Loan:
There is no minimum amount, other than that required to carry out substantial renovation. The maximum loan amount is €30,000, including the case of two successive Eco loans.
The amount is limited according to the type of works (see list above) done by the borrower:
- the loan is limited to €20,000 for works comprising only two of the six actions listed under bullet point "1" above;
- the loan is limited to €30,000 for works comprising at least three of the six actions listed under bullet point "1" above;
- the loan is limited to €30,000 for works enabling the building's energy consumption for heating, domestic hot water, air-conditioning, lighting and incidentals to be reduced (overall improvement);
- the loan is limited to €10,000 for replacement of individual drainage systems with equipment which consumes no energy.
If an individual Eco Loan is combined with a collective Eco Loan, then the loan can only be used to finance one single action of the "package", and is limited to €10,000.
Collective Eco Loan:
The maximum amount of such loans is given by multiplying 2 elements: the number of individual properties participating in the collective Eco Loan by the sum of €10,000 per renovation action financed up to a maximum of 3 actions. For example, if a condominium comprising 50 individual properties were to finance 2 renovation actions, and if all the individual properties were to participate, then the total maximum amount of the eligible collective Eco Loan would be €10,000 x 2 x 50 = one million euro.
In all cases, the loan amount is limited to the cost of the works, duly proved by production of the bills. It includes the cost of any studies and required related work (such as electrical or repainting work rendered necessary by the main renovation work).
Repaying the 0% Eco Loan
The loan repayment terms are determined on the date of issue of the offer. The loan is repaid by constant monthly payments throughout a "basic" repayment period of 120 months (180 months for projects involving 3 renovation actions or overall energy-performance work). The borrower may request that the repayment period be reduced, and the bank is free to accept or decline this request. In any case however, the repayment period cannot be reduced to less than 36 months.
The renovation work must be carried out within 3 years following the issuing of the related loan.
The State has made SGFGAS responsible for determining the factors used to calculate the tax credit relative to loans granted by lenders, doing so in accordance with the provisions of articles R.319-9 and R.319-10 of the French Building and Housing Code and for transferring the results of these calculations to the lender and the tax authorities.
Eco Loan in French overseas territories (Guadeloupe, Martinique, Guyane, La Réunion, Mayotte)
A special Eco Loan for French overseas territories was established in 2011. It provides funding for works specific to the climatic conditions in these territories (protecting roofing, walls and windows against solar radiation). The renovation work can consist in a number of specific actions selected from a package or general work to improve the overall performance. Non-collective sewage work is also eligible for funding. Properties for which the building permit was submitted before 1 May 2010 are eligible. Contractors used to carry out the work must have the "RGE" label.