Good News for Paris Short and Mid-Term Rentals

There is good news…and perhaps ‘light at the end of the tunnel!’…

We’ve been following the city’s interpretation of Article L.632-1 of the “Code de la Construction et de l’Habitation” closely ever since it first came to light in November of 2009. You may know it better as the ordinance which requires that all rental leases in the city of Paris be of at least one year in length (except for nine months if the tenant is a bona fide student). Heavy fines are threatened if an owner does not comply. The way the law is written, compliance is virtually impossible for all properties which are rented intermittently during the year, whether for one week or 11 months.

This interpretation of the law is unique to Paris. It has wreaked havoc among property owners affecting more than 20,000 apartments, hundreds of real estate agencies that represent rental apartments and potentially the many thousands of renters who will no longer be able to find accommodations in the City of Light unless they become permanent residents or wish to reside in a hotel room. The sheer insanity of the law has sent us all into a frenzied state of shock and  disbelief. In effect, this law stipulates that if you are not a permanent resident of the city, then you are not entitled to accommodations, with the exception of hotel rooms and apartments which are deemed as “commercial” — meaning that the usage of the property must be legally changed and is no longer considered residential. (Yes, this is contrary to itself!)

The city hall hasn’t been hugely aggressive enforcing the law against individuals, however, neighbors have been using it against neighbors in the form of denouncements for whatever reason they choose and the city has pursued mostly those cases. The city has, however, targeted French sanctioned agencies — those who have always had the exclusive right to participate in the business of property rental!

I know this is hard to believe, but it’s true. The housing shortage in the city of Paris has been so burdensome, that the city officials are looking for solutions. This was one of them, however ineffective, inappropriate or unconstitutional!

Yes, there have been some offenders prosecuted and fines have been issued. What we know about them is limited — less than ten, and we only know a bit about what properties they owned and how much they were fined. We are not privileged to the details of their cases.

Meanwhile, we have been working very closely with our attorney to understand the law and find ways of working both with it and around it. While we have found some temporary solutions, we have all held the belief that this cannot continue without a change in the law. In 2009, a federation was formed to contest the law — the Association des Professionnels de la Location Meublée — but how effective the association has been, has been of question…until now.

We have just learned that Cabinet Minister Claude Goasguen has proposed to the National Assembly an amendment to Articles L.631-7 and L.632-1.

In effect, the document states that (per Google Translate) “Articles L. 631-7 and L. 632-1 of the code of construction and housing are subject to various interpretations that endanger the economic sector of renting furnished short and medium-term.”

More by Google Translate:

“In cities with more than 200,000 inhabitants and in the ‘couronne’ of Paris, the mayor is competent to assess these provisions, not the prefecture. But the mayor of Paris, interpreting today a ‘contrario’ of the two articles, decides to ban rentals of furnished apartments of less than one year because the owners fail to comply to the use of their properties as residential housing. The owner must therefore now apply to the Mairie for change of usage, which is rarely granted, and must acquire a commerciality authorization. This last condition is a deterrent to individual property owners. In addition, this interpretation denies the reality that owners can no longer live in their apartments at the end of the lease because it is no longer designated as housing.”

“Although Paris is so far the only municipality interpreting the texts in this sense, there is a possible concern of jurisprudence, although it can affect all major French cities. According to the mayor, the objective is to redirect these furnished accommodations to the social sector, which appears illusory.”

“If this interpretation prevails, our cities could no more welcome:
– ‘Erasmus students’ and trainees (average stay: 3 to 4 months)
– Employees temporarily transferred to another city
– Foreign managers, researchers and teachers performing missions and study trips short or medium term
– Festivals, cultural events and sporting events
– Long-term tourism
– Those in an emergency situation: newly divorced, accompanying a hospitalized parentlong-term, owners whose apartments are under renovation, etc.”

“The furnished short and medium term is a variable adjustment necessary. Hotel offerings cannot satisfy these needs. In Paris, for example, an average stay in a hotel is 2.7 nights, compared to nearly 3 months in a furnished rental. In addition, lodgers generally move with their families. To prohibit this activity makes it illegal and gives a monopoly to professional operators domiciled outside France, without any benefit to the city or the state.”

“It is therefore necessary to remove the ambiguity of these texts stating that when the housing is not intended to be the principal residence, the provisions of the lease are left to the discretion of the parties.”

“This is why I suggest you adopt this proposal: After the second paragraph of Article L. 632-1 of the code of Construction and housing to be inserted the following paragraph: “When the lease is not established as for a main residence, term of the lease and end conditions are left to the discretion of the parties.”

Read the proposal in its entirety, in French, PROPOSITION DE LOI.

The proposal is just that…a proposal. We are hopeful that there will be a positive conclusion so that we can all take a deep breath and go back to having the rights over how we use our own properties in the city of Paris, or anywhere in France for that matter!

Stay tuned to FPI for more news as it occurs.

A bientôt,

Adrian Leeds
Editor, French Property Insider

Email: [email protected]

P.S. Aussies (and Kiwis), we have not forgotten you! Australian property consultant, Sarah Potter, and I (lowly American) will be co-hosting a special Meetup of the “Aussie-Francophile Property Network” on October 1st here in Paris where we will be discussing “How to Manage Your Paris Rental Apartment from Long Distance.” You need not be Australian or New Zealander to attend — but we do hope to provide a forum for our Australasia friends. Monday, October 1, 6 to 7:30 p.m. at La Pierre du Marais. Visit  Aussie-Francophile Property Network for more information and to join our network!

P.P.S. Join us at the next Property Investors Network Meeting Thursday, September 27, 2012 when I’ll be discussing “Developing Your Own Fractional Ownership Property.” It’s free your first time with the special code “Adrian.” Get more information and learn how to register for free: Property Investment Network.