Winning the War on Housing in Paris

Airbnb was fined 2,000€ by a French court this past week when an apartment owner discovered that his tenant was subletting a room in the apartment for 450€ per week. In this six-room apartment, the tenant hosted two other renters at 300€ each. The decision is being appealed, but meanwhile, the tenant is to pay much heftier fines totaling more than 17,000€.

According to Airbnb this is a first in France, that a tenant was convicted for subletting his apartment via Airbnb. However, supplementing your income by offering an apartment that is not your property is playing a dangerous game. Current laws enforced only in the city of Paris require that an owner may rent their property with a one-year lease (nine months for students), or register the apartment with the city as commercial property for short-term rental. Compliance for short-term letting is virtually impossible for a variety of reasons (read further on) and therefore almost no vacation rental apartments of the 20,000+ in the city are actually legal.
 
The city is desperate for affordable housing for its residents and is going to great lengths to rectify the problem, even if the strategy is not sound or the methodology unconstitutional (my opinion). Inspectors are roaming the neighborhoods where tourists can be observed with the hopes of getting inside to take photos so they can be compared with Web sites’ advertising. Last year, twice as many inspections were performed than the year before — more than 400.

Five owners of vacation rentals were sentenced last year and fined totaling 125,000€. Ian Brossat, the city’s Deputy Mayor of Paris Housing, promises to strengthen controls and alleges that the new ALUR law gives them the right.

In an article in Le Monde earlier this month by Jerome Porier, Brossat explained the new ALUR policy and how the city is dealing with the housing shortage. He understands that short term rentals are favorable to tourism and that they complement the hotel offerings in Paris, but their development should not be at the expense of residential property. The city wants to protect housing and curb speculation and rising prices. Brossat further explained that when an owner rents his residence a few weeks a year, this is not a problem, but when a multi-owner with four or five apartments rents short-term without authorization, the rules are broken. Paris does not want to become like Venice, a museum city.

The conditions under which an owner can legally rent short-term means changing the usage of the property to commercial. The city can grant it, but the copropriété must also permit this — and in reality, this is highly unlikely. In addition, if the rental property is in one of the central districts of the city where there is a greater lack of affordable housing, each square meter of housing turned into short-term rental must be offset by the conversion of two square meters in long-term rental housing. For other districts, the rule is one to one.

Advertised airbnb apartment in ParisThis means that should you own an apartment in Le Marais for short-term rental, you must also own and rent out two other properties of equal size for long-term rental. Meanwhile, getting approval to convert even one of them to commercial property in a residential building is near to impossible. And under these restrictions, imagine that if you want to live in Paris less than one year, in effect, you are not entitled to housing!

So, you see now why I believe the strategy is not sound nor the methodology constitutional! Brossat claims that since the rules have been put in place, the disappearance of housing has slowed significantly. I’d like to also ask how this has affected the economy — the real estate industry as a whole and tourism? We all know that France is suffering economically and thinking like this does not serve to improve it.

An airbnb location on the Canal St MartinIn cases where a short-term rental apartment has been threatened, by denouncing-happy neighbors or by a surprise city inspection, we have installed a one-year lease policy imposed on a renter who must agree to a minimum of one month — the legal cancellation period on a furnished one-year lease. This system fully complies with the law.

In a recent decision by the staff of Parler Paris Apartments, we believe that unsuspecting renters should be made fully aware of the current laws to avoid any issues and make them aware of possible surprise inspections of the property. This way they can preserve their right to rent short-term and the owner can continue to rent his property without disturbance.

It is not that we don’t think the problem is acute nor worthy of regulations to increase the amount of residential housing in the city, but we don’t agree with what the city considers the root of the problem nor the method in which they are trying to rectify it. There are definitely better ways of encouraging landlords to own and rent long-term housing — but that means doing more to protect the landlord and encourage property investment, while still protecting the tenant’s rights. In this scenario as it is now, neither wins — and we all lose.

A bientôt,

Adrian Leeds

Editor, French Property Insider & Director of The Adrian Leeds Group, LLC

Email: [email protected]

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