To Register or Not to Register, Is That the Question?

Short-term rentals in Paris and in other parts of the country remain a “bone of contention” for the lawmakers. Recent news tells us that we are faced with another set of potential regulations to make it more difficult than it already is, for both landlords and tenants.

I am not here to simply regurgitate the recent news, but to understand it and offer advice on how to deal with it. One must always remember that in France, there is “The Law,” and then there is “The Reality.” This is not to say that laws are meant to be broken, but in a system where law is based on what is allowed (rather than forbidden, as in English law), it is virtually impossible to follow all the rules, especially when many contradict one another, or aren’t logical, and it is a truism that most do not nor cannot follow them all.

This preface fits this scenario, so rather than panic at the first glimpse of what may come to pass, take a deep breath and remember this idea, as it’s important we look at the bigger picture and live within the reality.

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The headline in a recent article in The Local read: Airbnb: Paris set to force all users to register rental properties. Le Parisien’s article was titled: Décret Airbnb: les loueurs vont devoir s’enregistrer (Airbnb Decree: the renters will have to register). Le Point’s was titled: Enregistrement obligatoire à Paris pour louer son logement sur Airbnb (Mandatory registration in Paris to rental accommodations on Airbnb) etc., etc., etc., found in all the major publications.

The new initiative consists of four amendments and one reframing, voted by the Senate and supported by hoteliers and real estate agents is the following:
 
Entitlement: To be on a platform, a landlord must prove ownership or the authorization of the landlord to prevent illegal subletting.
 
Registration: An amendment proposes that the town halls could set up a procedure for the registration of the rental property before any publication of a rental offer. Passed in the Senate, this measure is currently limited to cities with more than 200,000 inhabitants.
 
Taxation: Another amendment seeks to obligate the platforms to pass the income received by their users on to the tax authorities. This is clearly a matter of fighting tax evasion.
 
Ceiling of duration: Finally, an amendment aims to ensure that the platforms comply with the Alur law, which allows the seasonal rental of primary residences for a maximum period of 120 days per year. (The city of Berlin has banned any rental and San Francisco limits it to 90 days a year.)

The truth comes out with this new initiative, as in the past the city has used the “housing shortage” as their main motivation to the restriction of short-term rentals in the City of Light. This time, the hotel industry is clearly behind new laws that are likely going to pass as the articles cite the city’s opinion that tourist furnished rental is to the detriment of the hotel sector, promotes real estate speculation, empties certain quarters of its inhabitants and causes daily inconvenience for others. Airbnb is the target, but they are not the only ones this will adversely affect (they control 90% of the market).

I personally question 1) why is the hotel industry more important than the average citizen who needs to supplement his income? 2) what is wrong with real estate speculation? 3) how is that rental apartments empty certain quarters of the city and hotels do not? and 4) what are the daily inconveniences to having part-time residents in apartments vs tourists in hotels? Therefore, clearly the hotel lobby just wants the biggest share of the pie, if they can achieve that. But the city is not realizing that an apartment can house one or an entire family for longer periods of time because it offers true accommodation, that a hotel cannot. This is where the logic is lost while trying to maximize tax revenues.  

If the new laws passes in the city council next week, as they are expected to pass unanimously, all rental accommodations listed on Airbnb will be required to have a registration number. They want these laws to apply to all cities, not just those of over 200,000 inhabitants.

This assumes that the properties advertised on Airbnb are primary residences which are renting no more than four months a year, as the current laws read. We all know that only a portion of them are — and many are secondary residences that can only legally be rented with a one-year lease or nine months to students. Still, part of the city’s goal is to ensure that they do not exceed the 120 day limit.

The city officials believe that the registration number will enable them to monitor the number of nights as each dwelling will have only one registration number. I doubt this will be respected, as what prevents an owner or tenant from registering the same property under different numbers? Or advertising it on many different platforms? Airbnb, while Paris is its largest market, is certainly not the only game in town!

There is already opposition to the regulations of course. The National Union for the Promotion of Vacation Rentals (UNPLV), which represents a number of  rental agencies, claims the laws will not obligate them to report the number of overnight stays per dwelling. On the other side, the hotel industry is launching a campaign to raise 1,500 cities to making use of the registration number!

So, let’s be clear: this is not about a housing shortage. This is about the hotel industry battling what they think is “unfair” competition! The city claims there are 65,000 short-term residences, but I’d contend that their numbers are skewed higher by duplicate listings, or properties that can only be rented a few weeks a year, while the owners are on vacation, as compared to a property that is for the sole purpose of vacation rental and available most of the year.

No doubt, this will slow down Airbnb and all the other rental platforms. Airbnb is proposing alternative solutions that benefit all concerned, rather than punishing the individual property owner in lieu of the hotel industry. And again, I question the reality of actually enforcing what they are proposing. This takes time, money and effort to build an infrastructure just to track it to find offenders.

And how does this affect the many thousands of secondary properties that are already illegally renting short-term? They are already finding ways around the laws, and that will likely continue.

Those that rent more than 120 days will easily have ways of hiding their excessive rentals by simply not putting them “on the books.” Doesn’t this just create an even bigger black market than already exists? And won’t that hurt tax revenues even more? Those convicted of abusing the regulations could face fines, but as an owner, will the fine be less expensive than the rental revenue gained?

The bottom line is that the officials are missing a very important fact: property owners need to have revenue to support their holdings and tenants need accommodations of all types and terms. That will never change. And as long as that exists, there will be ways around their laws to accomplish these basic needs and desires, no matter how many laws they pile on top of laws.

If you are a property owner in Paris renting short-term, don’t panic. Let us help you find ways around the regulations that will likely change again, anyway!

A bientôt,

Adrian Leeds
The Adrian Leeds Group

(by Erica Simone)

Respond to Adrian:

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P.S. Join us Tuesday 7/11 at the last Après Midi for the summer as Craig Carlson discusses his book, “Pancakes in Paris,” including how he came up with the idea for his diner and the challenges he faced opening and operating a business in France. Don’t miss it!