The New Mobility Lease — a Real Game Changer for Secondary Residences in Paris!

It’s a game changer…the Elan Act (Housing Act 2018). And we will be jumping for joy if and when it passes.

The housing law of 2018, or Elan Law, will again reform the real estate law in France. Keeping up can sometimes be hard to do – in a land where you think nothing changes, changes happen often and at the drop of a hat.

The Housing Bill, or Housing Development and Digital Development Bill (ELAN), was presented to the Council of Ministers on April 4, 2018, but the text of it must be voted in Parliament by this summer. In the meantime, its content may be amended by Members of Parliament and Senators.

Pending the publication of the final version of the Elan law in the Official Journal, here are the main measures provided by the draft law to be discussed by parliamentarians in the coming weeks.

The text of the Elan Bill (Housing Act 2018) can be downloaded online via the link (all 588 pages!). This is the version of the bill that was sent to the National Assembly, available in the form of a PDF file.

Rent Control

The Alur Law of 2014 has introduced a system of rent control whose practical implementation has been at least difficult and complicated: only two municipalities (Paris and Lille) have implemented it and the device was finally annulled by the courts Administrative offices in these cities at the end of the year 2017.

However, the government might want to keep the system because the draft legislation reinforces the penalties for owners who do not respect it. Article 43 of the preliminary draft provides for the possibility for the prefect to create an administrative fine, the amount of which would be equal to 25% of the amount of the overpayment of rent.

The text also provides for the urban planning agencies to approve scheduled rents.
 
Mobility Lease

Here’s the game-changing part of the Elan Law that most interests us:

The project plans to create a new type of housing lease: the “mobility Lease”, which includes tenants in professional mobility. It would concern the rental of furnished apartments over a period of one to 10 months and its terms of cancellation and termination will be flexible:

* The term of the lease will be agreed from the outset, and the lease will not be renewable;
* The lease will be without a “security deposit”;**
* the charges will be paid at a flat rate;
* The tenant may terminate at any time by giving a month’s notice and without having to justify his decision;
* No solidarity clause will be applicable in the event of having a roommate.

** The security deposit is the amount to be paid by the tenant upon occupancy of the premises to guarantee the possible claims of the lessor: arrears of rent or charges, but also repairs due to damage committed, etc.

In other words, at the end of the lease and after the inventory of the property, the lessor can retain from the deposit the possible unpaid rents. He can also retain the cost of restoration of the property if he proves that the tenant has not met his maintenance obligations. Subject to, of course, that the repairs are proven by supporting documents.

The security deposit is often called a “dépôt de garantie” in everyday French language. Legally, these two terms should not be confused, since the bond means the commitment of a third party to guarantee the payment of rent in case of default of the tenant. On the other hand, the lessor can ask for a damage deposit.

See also the rights and obligations of the “dépôt de garantie“.

The mobility lease is a new type of short-term rental lease. Subject to more flexible rules than the “classic” furnished rental, it aims to facilitate the mobility of tenants, including those who have to move for professional reasons. The mobility lease only covers furnished rentals. Unfurnished rentals are subject to the law of July 6, 1989 and are therefore not concerned. The duration of the mobility lease will be between one and 10 months. This duration will be agreed upon at the signing of the contract.

In order to prevent abuses leading to the tenant becoming precarious through the signing of successive leases, the lease will not be renewable. This doesn’t mean that a new lease cannot be signed, however. The tenant may terminate his mobility lease at any time within a notification period of one month.

Tenants who sign a mobility lease for professional reasons will be eligible for the “Visale scheme.” This is a rental guarantee covering unpaid rent and the restoration of the premises. See droit-finances.commentcamarche.com/ for more information on this.

Adrian Leeds Group Apartments – Le Magenta

Comment: This Mobility Lease allows owners of secondary residences to rent their properties legally while they are not using it themselves. For all of our foreign owners who have been sweating bullets over their illegal short-term rentals, this one small change makes it viable again to “have their cake and eat it, too” – that is, to reap the rewards of their investment and have use of their property, too. It’s about time that the administration realized that there is a difference between a one-week rental and a one-year rental – that people have a need for housing and the landlords have a need to recuperate their costs of ownership.

Urban Planning

One of the stated objectives of the reform is to simplify planning rules. Some procedures should be relaxed. Measures will also be taken to prevent abusive use of building permits: sanctions for abuse could be strengthened. As for building permit applications, they should be available online in municipalities whose population exceeds a certain threshold.  

HLM (low-rent housing)

Social housing will also be a subject of the law. In particular, the government plans to bring together HLM organizations . government is considering consolidating the HLM bodies.

Condominiums

The condominiums will also be affected by the reform, which aims to better adapt the rules according to their destination and size. It is envisaged in particular to set up a co-ownership board of directors, which would replace the general assembly in large condominiums. These measures will normally be taken by order (and therefore without a vote in Parliament).

Digital Lease

The text also provides for the establishment of a digital lease, with a dematerialized and electrically signed leasing contract.

Tourist Rentals

The project reinforces the control of short-term tourist rentals such as Airbnb. Once the municipality makes the request, the renters will have the obligation to provide it with the number of nights occupied for the current year. Sanctions for landlords’ failure to comply with their obligations should also be strengthened.

For more information, in French, visit this website.

Comment: It’s about time! This is at least one step forward to managing what has become an untenable situation for owners of secondary residences who aren’t landlords for the sole sake of profit, but wish to enjoy their properties while covering the costs of ownership with occasional rentals.

Hats off to M. Macron! Let’s hope (and pray) for success.

A bientôt,

Adrian Leeds
Adrian Leeds Group

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P.S. If you have been thinking of making an investment in Paris property, but hesitant because of the current short-term rental laws, then now you can reconsider and take the plunge as prices are still on the rise and with this, will even go higher! Contact us for advice and assistance on finding the perfect property for you. Email [email protected] or complete our consultation form.