The Short-Term Rental Issue is Moving Beyond Paris…

The city of Paris is awfully proud of itself — it claims to have fined 31 owners with 128 units a total of 615,000€ in fines for renting their own properties more than 120 days during the year. That’s ten times the fines that have been imposed in the past. Ian Brossat, the city’s housing advisor, has a team of 25 agents deployed to ferret out the “offenders” and is very pleased that the courts have had a heavier hand than before.

Brossat himself is a registered Communist whose grandfather, Marcus Klingberg, was convicted of spying for the Soviet Union. So, would we think that Brossat has any interest in protecting property owners’ rights? Why would he appreciate anyone who owns property? Or even has a balanced view how their actions affect both the landlords and the tenants as well as the economy and tourism?

I don’t think so.

The maximum fine for renting your property “illegally” used to be 25,000€, but the city has doubled that to 50,000€. Do you think this elevated fine fits the “crime?”

I don’t think so.

It’s a bit over the top for the crime of renting your own property more than the allotted 120 days a year. And while they used to tout the Paris housing shortage as the primary reason for their zealousness in shutting down the rentals, we recently discovered that the real reason has to do with the hotel industry (the UMIH — Union des Métiers et des Industries de l’Hôtellerie) being unhappy about “unfair competition” as well as the tax euros that the hotels bring in vs apartment rentals, where landlords are hiding their revenues from the authorities.

Brossat was quoted in the media as having said to Radio France Inter, “You can’t turn your lodging into a cash machine and yourself into a speculator.”

I’d like to know why not? What makes it so “criminal” for an investor/property owner to want to profit from his investment, or help cover his costs? Isn’t that the primary reason people invest in property, or is it purely to live in the rest of their lives, 100% of the time? And why is it okay for the hotel industry to earn revenues off their real estate and not for the individual homeowner?

Clearly it’s a cultural viewpoint as well as a political one. Is it the capitalist in me confused by socialist ideas? Or is that I want a better balance so that all parties can benefit, rather than be punished?

I think so.

If it’s a question of missed tax opportunities, then why encourage homeowners to create a black market? The harder they are on the landlords, the more paths they will find to circumvent the authorities. So, instead, why not incentivize them to offer their properties, but pay their share of the taxes, and as a result reduce the proliferation of the short-term rentals in a way that is economically beneficial for everyone? Why don’t they create standards and a system of management so that everyone can benefit — the tenants as well as the landlords? And don’t they realize that if the minimum rental of a secondary property is one year, then if you need accommodations for less than that, you’re not entitled? And on top of that, what happens is that the owners will simply leave it vacant while they’re not using it themselves, contributing to their housing shortage. Does that make sense?

I don’t think so.

Airbnb is the biggest culprit and their biggest target, with 55,723 offerings in Paris alone. Airbnb manages to avoid paying French taxes by headquartering in Ireland. (Isn’t every company looking for a way around overtaxation?) This doesn’t help the battle the average property-owner faces, while Airbnb is laughing all the way to the bank and the owners are being punished for their “sins.” I don’t disagree with Airbnb or any of the other platforms paying their fair share. As booking agents and property managers registered in France, we certainly do.

Paris adopted the “Airbnb Decree,” this past July 4th to register each seasonal rental. Other cities that are following suit are Bordeaux, Strasbourg and Nice. The city of Nice has issued a request form for the authorization of the rental of tourist accommodations which requires a change of usage (Art. L. 63I-7 of the Code de la Construction et de l’Habitation (C.C.H)). This applies to residential premises which constitute the principal residence of the landlord. Rental revenues must be declared and the tax authorities will provide the landlord with a SIRET number associated with the activity. (See a copy of the registration form)

In opposition, the UNPLV (National Union for the Promotion of Holiday Rentals) which represents the main players in the market argues (translation): “If this procedure is extended to too many communities, going against the philosophy of the system, we fear that this would favor the transfer of many rentals to The underground economy, making control even more difficult… ” said Timothée de Roux, president of the organization.

Airbnb contends that the registration requirement is an ineffective and costly measure. “This is lobbying by the hotel service unions,” said Aurélien Pérol, Public Affairs Communication Manager for France and Belgium, Airbnb. Paris must register 65,000 units which requires a lot of human resources, and en estimated cost of 200,000€ for each community. While everyone agrees that the market must be regulated, there is argument as to the best ways to go about this.

I have a whole list of ways to effectively manage the short-term rental problems, but I doubt they’ll listen to me.

Yep, I don’t think they will. All we can do for now is watch, listen and pray they come to their senses. We’ll keep you posted. For now, don’t panic. We’re seeking solutions.

A bientôt,

Adrian Leeds
The Adrian Leeds Group

(By Timothy Jay Smith)

Respond to Adrian:

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P.S. We’ll be filming another episode of House Hunters International in September, this time in the Languedoc region, with a well-known American photographer and her partner who wanted something secluded. Why? Because she shoots female nudes and gives workshops…so the models and the photographers need privacy!

For this episode, we are seeking comparable properties in which to film:

* house or villa in countryside or village, but with privacy
* located in the Languedoc-Roussillon, near the Parc naturel régional du Haut Languedoc or somewhere between the towns of Montpellier, Béziers, Narbonne, Toulouse, Albi and Millau
* with no less than 3 bedrooms, preferably 5 or 6 or more, accompanied by an equal number of bathrooms
* 150m2 or more
* with a pool, if possible
* at a value between 190,000€ and 300,000€

If you know of any property that fits this general description and is willing to let us spend about four hours inside with a small crew and light equipment, let me know asap! email us at  [email protected]