Renting out a substandard dwelling yields more profit than renovating it — and the state finances it
On November 5, 2018, two buildings collapse on rue d’Aubagne in Marseille. Eight dead. A third building demolished, 4,500 people evacuated.
The trial opens six years later, in November 2024. The verdict on July 7, 2025, convicts ten of sixteen defendants, including three co-owners, to prison time with electronic monitoring. But this trial was not about substandard housing in Marseille as a whole: only about two collapsed buildings [14].
Behind this tragedy lies a functioning market. It rests on a simple logic: the misery of tenants is a source of income for landlords who run almost no risk. This market persists because two levers have never been activated together: making renovation accessible and profitable, and making indecency legally impossible. The 2027 arbitration is to deploy these two levers simultaneously, at the same scale.
Four million poorly housed people, and the situation is worsening
In 2025, the Foundation for the Housing of the Disadvantaged estimates 4.2 million people in situations of poor housing: either without a home or living in very difficult conditions [1]. Around this hard core, another 12.1 million people are at risk: troubled co-ownership buildings, unpaid rent, overcrowding, cold, crushing rents [1].
The hardest subset to quantify is substandard housing in the legal sense. Between 400,000 and 420,000 dwellings in the metropolitan private housing stock are potentially substandard, according to a note from the ANAH (National Housing Agency) and the Ministry from June 2021 [3]. Add to this 100,000 dwellings in overseas departments and territories [3]. CEREMA estimated roughly 500,000 substandard dwellings actually occupied in the metropolitan private housing stock in 2023 [2]. These situations affect all departments, rural areas as much as cities.
The trend, measured over thirty years, points in the wrong direction. Demand for social housing exceeded 2.7 million households in 2024, while deliveries fell to around 84,000 social homes: compared with 124,000 in 2016 [1]. The Foundation estimates 350,000 people without shelter each night in 2025, versus 300,000 in 2020 [1]. In 2023, 735 people died on the street, according to the collective Deaths on the Streets [4].
Energy-inefficient housing concentrates tenants who cannot afford to leave
Substandard housing and energy poverty overlap almost perfectly. Of the 30.6 million principal residences recorded on January 1, 2024, roughly 4.2 million are energy-inefficient: rated F or G on the energy performance diagnostic, or 13.9% of the stock [7]. In the private rental market, this rate also reaches 13.9%, compared with 5.8% in the social housing sector [7].
These inefficient dwellings concentrate precisely the households that cannot afford to go elsewhere. In 2024, 75% of households reported restricting heating to control their bills, a jump of 22 percentage points from 2020 [1]. And 30% reported suffering from cold in their home, versus 14% in 2020 [1]. The number of interventions for unpaid energy bills exceeded one million for the first time in 2023, up 81% in three years [1].
The worst-insulated, oldest, and most degraded dwellings are also those occupied by tenants who cannot afford to turn on the heat. Public Health France documents this excess mortality linked to cold in poorly insulated homes [15]. Extreme weather events are intensifying. They strike first the lower levels of the rental market.
A right to housing that the state has promised for eighteen years without being able to honor it
France established in 2007 the enforceable right to housing: DALO. The idea was to engage the state’s responsibility toward households in situations of severe distress. The balance sheet, eighteen years later, documents a dead end.
In 2024, filed appeals reached 124,958 cases: the highest level since the law’s creation, up 14% in a year [5]. Favorable decisions amounted to 37,132, a record [5]. But 52% of households recognized as priority that year were not rehoused within regulatory timeframes. In total, 110,000 households remain to be rehoused, more than 95% of them past deadline [5].
Between 2008 and 2020, more than 330,000 households were recognized as eligible for urgent rehousing. Only 62.8% received an appropriate offer, according to the Court of Auditors [6]. The explanation is structural: the right is enforceable against the state, but the state does not have the necessary dwellings to honor it.
Twenty billion euros in aid paid annually into housing that no one renovates
Public administrations devoted 29.6 billion euros to housing in 2024, or 1.01% of GDP [9]. Personal housing allowances alone represented 20.1 billion euros in 2023 [9]. These allowances improve the solvency of tenants, not the decency of the buildings.
Convergent research conducted between 2015 and 2022 concluded that a significant portion of these allowances was captured by landlords, who raised their rents proportionally. Estimates vary between 70% and 100% depending on the studies [10]. The system pays billions to the poorest households so they can pay rent in substandard dwellings to landlords who do not renovate. Personal housing allowances finance the status quo.
For substandard housing proper, the National Housing Agency had 250 million euros in 2024, enabling the treatment of 15,500 dwellings [13]. Measured against the 500,000 substandard dwellings estimated by CEREMA in 2023 [2], this pace implies several decades to eradicate the stock. And the stock renews itself.
A rental permit that is optional in 500 communities out of 35,000
The current architecture produces a rational market for indecency. Renting a degraded dwelling to a precarious tenant is profitable: the tenant pays with allowances, the landlord does not renovate, sanctions remain rare and slow. Conversely, without serious renovation aid, many small landlords with limited means cannot renovate, even if they wanted to. These two realities long justified two antagonistic positions, never resolved together.
The rental permit, established by the ALUR law of 2014, could have reversed the logic of impunity. Its application is optional, left to the initiative of local governments. This optional character makes it a very limited tool: in 2025, more than 500 municipalities adopted it, out of 35,000 [14]. The municipalities that would need it most are often those with the least human capacity to operate it.
The report submitted to the government by the mayors of Saint-Denis and Mulhouse in October 2023 charted a different course [11]. Mathieu Hanotin and Michèle Lutz propose intensifying coercive measures against unscrupulous landlords (improving confiscation procedures, opening the sale at a symbolic euro of buildings confiscated by local authorities) and strengthening public engineering to support those who want to renovate. The law of April 9, 2024, adopted some of these measures without resolving the central knot: the rental permit remains optional [12].
Making certification mandatory and renovation financially accessible, together
The arbitration is to deploy both levers simultaneously: something that has never been done.
The first is a national obligation of prior authorization before renting out, attached to a certified decency diagnostic. Before renting, every landlord would prove that their dwelling is decent. Without authorization granted, no legal lease, no personal allowances paid for that dwelling. This device, documented by the Hanotin-Lutz report of 2023 [11] and by the work of the Foundation for the Housing of the Disadvantaged [1] [13], changes the architecture of the low-end rental market. Substandard property would become financially irrational, lacking rental income without compliance.
The second lever is inseparable from the first: redirect a portion of the 20 billion euros in personal housing aid toward direct renovation aid for landlords with limited resources [9]. Payment of personal allowances would be progressively conditioned on certification of the dwelling. It would also be necessary to massify the tools of local public engineering (operators, advisors, filing platforms) that medium-sized municipalities cannot build alone.
A ban without aid pushes small landlords to sell rather than renovate, which can worsen rental tension in tight markets. Aid without a ban prolongs the subsidization of the status quo. Together, these two levers break apart the income source of slumlords, whose model rests on the absence of prior control, without penalizing good-faith landlords who lack the means.
The cost of scaling up is real: training certified experts, filing platforms, capacity for processing in prefectures. Estimates appear in the Hanotin-Lutz report of 2023 [11]. The honest budgetary question is that of the counterweight: the personal allowances that cease to feed substandard dwellings unlock a lever otherwise far more powerful than the 250 million euros annually from the National Housing Agency [9] [11] [13].
After such a reform, the rental market ceases to be regulated by absence of control. Indecency ceases to be subsidized. Renovation becomes more profitable than allowing decay.
Sources
[1] Foundation for the Housing of the Disadvantaged, “30th Report on the State of Poor Housing in France 2025,” February 4, 2025, https://www.fondationpourlelogement.fr/30e-rapport-sur-letat-du-mal-logement-en-france-2025/ (accessed 08/09/2026).
[2] CEREMA, “Contribution to the Guide for Identifying Substandard Housing,” 2023, https://www.cerema.fr/fr/actualites/cerema-contribue-guide-reperer-habitat-indigne (accessed 08/09/2026).
[3] ANAH / Ministry of Housing, “Methodological Note on the Potentially Substandard Private Housing Stock (PPPI),” June 2021; figures cited by Local Public Enterprises, November 2023, https://www.lesepl.fr/2023/11/les-capacites-dintervention-fonciere-de-la-puissance-publique-au-coeur-de-la-lutte-contre-lhabitat-indigne/ (accessed 08/09/2026).
[4] Foundation for the Housing of the Disadvantaged, “30th Report from the Foundation for the Housing of the Disadvantaged: France Sinks into the Housing Crisis,” February 4, 2025, https://www.fondationpourlelogement.fr/30e-rapport-de-la-fondation-pour-le-logement-des-defavorises-ex-fondation-abbe-pierre-la-france-senfonce-dans-la-crise-du-logement/ (accessed 08/09/2026).
[5] High Committee for the Right to Housing (HCLPD), “DALO Statistics Dashboard 2024,” 2025, https://www.hclpd.gouv.fr/parution-du-tableau-de-bord-statistiques-dalo-2024-a256.html (accessed 08/09/2026).
[6] Court of Auditors, “The Enforceable Right to Housing (DALO),” thematic report, January 2022, https://www.ccomptes.fr/fr/publications/le-droit-au-logement-opposable-dalo (accessed 08/09/2026).
[7] SDES (Statistical Data and Studies Service, Ministry of Ecological Transition), “The Housing Stock by Energy Performance Class on January 1, 2024,” December 2024, https://www.statistiques.developpement-durable.gouv.fr/le-parc-de-logements-par-classe-de-performance-energetique-au-1er-janvier-2024 (accessed 08/09/2026).
[8] François Ecalle (FIPECO), “Housing Policy,” 2024, https://www.fipeco.fr/fiche/La-politique-du-logement (accessed 08/09/2026).
[9] Court of Auditors, “Report on Personal Housing Allowances,” July 2015, https://www.ccomptes.fr/sites/default/files/EzPublish/20150916-rapport-APL.pdf (accessed 08/09/2026).
[10] IGEDD (formerly CGEDD), “The Inflationary Effect of Personal Housing Allowances Remains to Be Evaluated,” October 2022, https://www.igedd.developpement-durable.gouv.fr/l-effet-inflationniste-des-aides-personnelles-au-a4300.html (accessed 08/09/2026).
[11] Mathieu Hanotin and Michèle Lutz, “Mission Regarding Housing and Urban Planning Tools to Create or Improve to Strengthen the Fight Against Substandard Housing,” IGEDD, October 2023, https://igedd.documentation.developpement-durable.gouv.fr/notice?id=Affaires-0013188 (accessed 08/09/2026).
[12] Ministry of Housing, “Press Release: Reinforced Support Plan for the Law of April 9, 2024,” April 2025, https://www.ecologie.gouv.fr/sites/default/files/documents/04.04.2025-DP-Lutte%20contre%20l’habitat%20indigne.pdf (accessed 08/09/2026).
[13] Foundation for the Housing of the Disadvantaged, “The Poor Housing Notebooks: Substandard Housing,” June 2025, https://www.fondationpourlelogement.fr/wp-content/uploads/2025/06/lhabitat-indigne.pdf (accessed 08/09/2026).
[14] Marseille Criminal Court, judgment of July 7, 2025, case of the collapses on rue d’Aubagne; synthesis in Les Petites Pierres, January 2026, https://www.lespetitespierres.org/actualite/pourquoi-le-proces-de-la-rue-daubagne-est-il-devenu-un-symbole-de-la-lutte-contre-le-logement-indigne/ (accessed 08/09/2026).
[15] Public Health France, “Mortality Related to Heat and Cold in 18 French Cities,” 2018, https://www.santepubliquefrance.fr/revues/articles-du-mois/2018/mortalite-liee-a-la-chaleur-et-au-froid-dans-18-villes-francaises (accessed 08/09/2026).
