Rent Control for Paris: Will It Really Benefit the Tenant?

Anyone who has ever tried to find a long-term apartment to rent in Paris, whether furnished or not, knows how virtually impossible it is. It’s a service we offer to find such properties and it’s become our most sought-after…for good reason. The housing shortage is acute and officials are trying to find ways to reduce it.

One way is rent control — now here officially, as per the “ALUR” law that was published in the Official Journal on June 12th.

New laws enacted by the socialist government will control rents and cap real estate agent fees — more laws to protect the tenant. They are trying to balance this with laws favoring the landlords by limiting taxes (on rental earnings in an area where there is a particular housing shortage) and providing unpaid rent insurance (government run to ensure the landlord gets paid), but because the laws largely favor the tenant, landlords are weary of being landlords!

In my opinion, this is the number one reason for the housing shortage they are so desperately battling as landlords can’t afford to take the risk of renting to someone who might default on payments or ‘squat.’ Residents cannot be evicted during the winter months and eviction at any time virtually takes an ‘act of God.’

Paris is the country’s biggest problem and most affected, but other areas are subject to these laws — Marseille, Lyon, Montpellier, the Corsican city of Ajaccio, and the Atlantic resort of Arcachon.

The press also blame international absentee landlords who they believe “have soaked up much of the better stock” — the reason the city of Paris is so hell-bent on reducing the inventory of short-term rental apartments. They also blame agents for demanding exorbitant finders’ fees, hence the cap.

Rents will be limited to an increase of no more than 20% per square meter above the neighborhood’s median rent, determined by a “local rent observatory.” Existing rental contracts over the limit will have to be reduced when renewed. The trick for the landlords is to set the rent high from the outset which will increase the media rent across the board…and you can count on this happening.

The results of these new laws are yet to be seen, but there is some talk that more tenant-friendly laws will simply lead to more bad news — landlords will increase rents or sell to avoid investment property ownership altogether in a less profitable environment.

Paris rents currently average about 31€ per square meter, although in wealthier districts, rents are at a much higher rate. As a tenant, getting approved by a landlord is still tricky business and may become even more difficult as a result — just what they’re trying to avoid.

Maximum rental amounts are determined by a price per square meter, controlled by the prefect within each category of housing based on data provided by local rent observatory and approved by the Ministre du Logement (Minister of Housing).

The law provides for a difference in lodging characteristics — location or amenities — within the same category and geographic area:

– type of rental (unfurnished or furnished);
– number of rooms;
– construction period of the building.

It also provides for any special qualities of a home that could justify additional rent, which are:

– not having taken into account in the determination by the local rent observatory, the maximum rent for housing;
– be decisive in fixing the rent, especially by comparison with other properties in the same category located in the same geographic area;
– not be subject to expenses paid by the tenant.

In Paris, where the local rent observatory is approved as of December 2014, the rent control law can enter into force on August 1, 2015, after the publication of the corresponding prefectoral decree.

In the other areas where the housing shortage is acute, rent control will be applied gradually, under the approval of local observations of the rents of the different areas concerned.

See more at the Paris Notaire’s Web site.

A bientôt ,

 Adrian Leeds

The Adrian Leeds Group

Respond to Adrian: [email protected]

P.S. If you are seeking a long-term rental apartment furnished or unfurnished in Paris or on the Riviera, our service to find an apartment takes you from the search to the signing of the lease and is a proven successful method of finding your accommodations with your visiting the properties, or secured sight unseen. For more information about the service, visit our Long-Term Apartment Search page or email [email protected]