Light at the End of the Short-Term Rental Tunnel

We all knew deep down in our hearts that something had to give…the city officials simply couldn’t continue to be as unjust, unfair and nonsensical as it has been regarding their policy on short-term apartment rentals. Since November of 2009, when the laws on the books first came to light, when the housing department began to follow up on denouncements by neighbors and then take on the full-blown campaign waging war against innocent homeowners, we have prayed for some light at the end of the long, dark tunnel that seemingly led to nowhere.

Personally I have been seriously affected, having sold two treasured properties that took a lot of time, money, effort and heart to create and manage as a result of being ‘discovered’ by the team of 20 people Madame le Maire Hidalgo appointed to ferret out offenders — one of which was meant for my retirement…and now long gone. In addition, our property owners, the foreign buyers who have a deep love and appreciation of Paris and France, who invested their hard-earned bucks in a “pied-à-terre” they could enjoy themselves and rent when available, had their ‘hands bitten’ by the very city they fed.

The anger has not sat well with me, nor with the thousands of others like me for whom this has negatively affected. Now, finally, there seems to be light at the end of this tunnel.

If you are not aware of the challenge we have faced, let me refresh your memory or put it in simple terms. According to the current regulations, a primary residence can be legally rented short-term up to four months a year in total. A property holding ‘commercial usage designation’ can be legally rented any duration. A secondary property can legally be rented one year or nine months to a student, but no less of a lease is legal.

I’ve written about this extensively in our Nouvellettres® and long ago posted a petition to submit to Madame Hidalgo.

The regulations mean that as a tenant, if you want to live in Paris less than one year, you were not entitled to housing. That goes for the thousands of individuals who come here for work or education and those who need temporary housing of any sort. They are virtually relegated to a hotel or commercial property. One is entitled to stay in France 90 days with no visa, but with nowhere to live except outside the city limits or accommodations unfit for long-term housing.

This also means that suddenly all of those earnest investors and property owners are operating illegally and have to make certain choices: 1) continue doing what they were doing until caught; 2) stop renting their property at a loss of revenue which covers the operating costs; 3) obtain commercial usage designation for their property (near to impossible to achieve) plus pay the city heavy licensing fees or 4) sell their property.

As a renter of short-term properties for vacation or otherwise, your choices became more limited as legitimate professionally managed properties came off the market while more and more owners offered their own unprofessional principal residences for short-term rental. Airbnb boombed while long standing rental agencies suffered (such as ours, Parler Paris Apartments and our partner site, Paris Sharing).

I am familiar with one agency in Paris — one of the first to offer luxury rentals as long ago as 1998, fully licensed by the city to operate, a company which collected and paid all its taxes and was forced out of business by the city. City agents knocked on the doors of the apartments and harassed the innocent and unsuspecting renters. The company had to sell off all their properties, mostly located on the two islands in the Seine, shut down its operations and move to another country to operate — where they found success. The properties that the company sold off naturally became short-term rentals…illegal ones, of course.

After six years of living this ‘hell,’ this past week we received an unofficial notice from a member of the SPLM —  the Syndicat des Professionnels de la Location Meublée — a lobbying organization that was formed in 2009 to combat the unfair regulations, that in June of this year the French Prime Minister Manuel Valls ordered a study by the Inspection Générale des Finances (IGF), an interdepartemental auditing and supervisory body in France.

You can follow the progress of the study on the official Web site.

In summary, the first study concluded that:

a) The demand for short to medium term furnished rentals exists and is legitimate

b) No such offerings are possible within the current legal framework

c) The short-term rental of “résidences secondaires” (whether the owner is Parisian or not) would help to satisfy that legitimate demand, without taking housing off the market for long-term rental (which by definition cannot take place in résidences secondaires).

The recommendation of the IGF is to create a new lease called “Location Temporaire” that would be valid for rental durations of one week to six months, for example. They estimate that some 7,600 apartments would be concerned (on top of the “résidences principales” in which up to four months of short-term rental is already allowed — a figure not high enough to impact long-term housing.

As a counter-measure, they propose to eliminate the furnished rental “niches fiscales” (i.e. amortization and micro-BIC régime).

Conclusions to the study are expected in late January. We are all hoping and praying for positive results. For me, personally, it’s too late. I fed the city with my own efforts and have been personally and directly responsible for bringing in hundreds of millions of euros into the city’s economy thanks to the hundreds of clients with whom we have worked since 2002 to help them purchase and maintain a property in Paris for their own pleasure and profit. Then, the city of Paris bit my hand.

If the study can evoke an amendment to the regulations that will be fair and equitable to everyone, then these past six unjust years can be forgiven and everyone can breathe deep and take in the fresh air. Potential investors can feel safe again to show Paris how much we all love the city.

Let’s face it, it’s tough not to love Paris, in spite of a few ignorant (and thankfully temporary) politicians.

You can read the report (in French), and read Manuel Valls’ mission letter (in French).

A la prochaine…

Adrian Leeds
Editor, Parler Paris

(by Linda Hervieux)

Respond to Adrian

P.S. Tiny House World has moved our Paris episode to Saturday, December 5th. Don’t miss it