French Housing Crisis: Will New Laws on Short-Term Rentals Solve the Problem?

By Jay Corless, edited by Adrian Leeds

As an organization deeply invested in the French real estate market, we have witnessed firsthand how housing policies impact not just prices and rental yields but also the lives of residents and the character of entire neighborhoods. The new French law adopted on November 7th, aimed at regulating short-term rentals, like those offered on platforms such as Airbnb, is well-intentioned and, in many ways, needed but doesn’t cover all the needs. It’s a step toward addressing France’s housing crisis today, offering a glimmer of hope for a more balanced housing market. But this focus on short-term rentals is only one of many answers to housing shortages.

Overall, the law is just a band-aid that overlooks deeper issues.

THE NEW LAW: A STEP TOWARD BALANCE

Let’s start with what this law does. It tackles short-term rentals in a way that recognizes their popularity with tourists while trying to balance the needs of locals.

The new regulations:

1. Reduces tax benefits for short-term rentals, lowering deductions and making them less lucrative than traditional rentals.

2. Energy Performance Certifications are required to ensure that short-term rentals meet environmental standards similar to those of long-term rental properties.

3. Gives More Power to Local Authorities by allowing mayors to limit the number of short-term rentals, cap rental days, and enforce a registration system.

4. Increase Restrictions in Co-Owned Properties, enabling buildings to vote more easily to ban short-term rentals.

The law states that these measures aim to create fairer conditions for residents and allow communities to take control of their neighborhoods. Drafters claim that entire towns have been transformed into seasonal tourist hubs, leaving empty storefronts and streets during the off-season. French lawmakers feel the law responds to a real problem—France is trying to ensure its communities remain populated by year-round residents, not just summer tourists.

THE BIGGER PICTURE: FRANCE’S MULTI-FACETED HOUSING CRISIS

Yes, the impact of short-term rentals on housing availability and affordability is undeniable, especially in popular destinations. For instance, in Paris the proliferation of short-term rentals has led to a significant decrease in available long-term rental properties, driving up prices and making it increasingly difficult to find affordable housing. However, suggesting that short-term rentals alone are the root cause of the housing crisis is an oversimplification. France’s housing market is strained by various factors, many of which go unaddressed by this law.

1. Lack of New Housing Supply

The French property market needs more housing, particularly in high-demand urban areas and attractive coastal towns. Construction is slow and costly, hindered by strict zoning regulations and a sometimes long and slow approval process. Limited construction means there aren’t enough new homes entering the market to keep up with population growth and demand. While it might seem necessary, focusing on regulating short-term rentals doesn’t address this fundamental supply problem.

2. Long-Term Rental Market Challenges

Strict rental regulations in France often make long-term renting less attractive to property owners. France’s landlord-tenant laws provide strong protections for renters, which is generally a positive feature of French society. However, these laws can also make it challenging for landlords, leading many to turn to short-term rentals which don’t have the same tenant protections and thus feel like a safer investment. By focusing so heavily on restricting short-term rentals, the law fails to address why landlords avoid long-term rentals in the first place.

3. Tax and Fiscal Policy

The new law tightens tax benefits for short-term rentals, which could push some owners toward long-term rentals. However, a broader approach to tax incentives could encourage property owners to contribute to affordable housing solutions. For example, providing incentives for landlords who offer below-market-rate rents or create housing for low-income families could make a real difference in areas where affordable housing is scarce.

4. Urban Planning and Zoning Restrictions

The strict zoning laws and urban planning regulations in France make it challenging to adapt housing to the needs of modern communities. Local governments could take steps to identify areas for residential expansion or even re-purpose underused commercial and industrial spaces. However, these systemic changes require policy adjustments at both the local and national levels, which this new law does not address.

PRESERVING “L’ESPRIT DE QUARTIER”

The new law’s focus on short-term rentals is a step toward addressing housing pressures, particularly in tourist-heavy areas where locals often struggle to find affordable, long-term accommodation. The government aims to return some properties to the long-term rental market by limiting tax benefits and increasing short-term rental regulations. However, to create a more sustainable impact on housing accessibility, the approach must go beyond short-term rentals. Broader policies considering the complex dynamics of the French housing market would strengthen these efforts, ensuring that housing is available and affordable for a broader range of residents.

Dedicated to helping people find homes in France, we recognize that these new measures may have value but also present limitations. France is not just Paris, Provence, or the Côte d’Azur; it’s a mosaic of communities, each with its charm and identity. Preserving the ‘esprit de quartier’ (the neighborhood spirit), which refers to each neighborhood’s unique character and local culture, means protecting the locals who give a place its life. Still, it also means ensuring France remains a place where people worldwide can experience the authentic French lifestyle.

This law is a step in the right direction, but it’s not a complete solution. To address the housing crisis, France needs policies that support housing for all—locals, expatriates, and even tourists who sustain local economies. A broader approach that includes both short-term and long-term housing solutions will make it possible to preserve what makes France unique while ensuring that housing remains accessible.

So, while we acknowledge these new regulations, let’s keep the conversation going. France’s housing crisis requires a comprehensive approach that considers the diverse needs of residents, property owners, and communities. This is not just a matter of housing, but a fundamental aspect of our society.

Ultimately, we all want the same thing: vibrant neighborhoods where people can live, work, and thrive.

And for our personal goals, we would appreciate more long-term housing for our incoming expatriates as well as a legitimate and healthy way of generating revenue from our clients’ properties in France…if that is one reason they have them!

A bientôt,