New Rental Controls In France Could Force Landlords To Lower Rents

Landlords letting both furnished and unfurnished property in France face new rent controls and tougher penalties for those who flout the rules. It could mean rents in areas …

Landlords letting both furnished and unfurnished property in France face new rent controls and tougher penalties for those who flout the rules.

It could mean rents in areas with a lack of affordable properties, such as Paris, being reduced by up to 25% with each prefecture assessing average rents and setting limits.

But the changes are not as draconian as first proposed and the new bill has been watered down during the political process.
The main changes will see rent controls in some areas, tougher penalties and a more rigorous tenant vetting process. There will also be an optional rental guarantee scheme introduced.

Full details have yet to be published but the changes are being brought in from the autumn of this year. Officials are gathering rental prices to set up a rents index to determine levels in each area.

It is likely that rental controls are to be imposed on 28 town and cities and some popular coastal areas where there are lots of holiday lets which have been defined at areas with shortages of affordable housing. Locations named so far include Paris, Lille, Marseille, Aix en Provence, Saint Nazaire, Menton, Monaco, Montpellier, Frejus, and Bayonne.

If the rent demanded is 20% to 25% above the average for the location it will be subject to a compulsory reduction determined by each prefecture.

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It is estimated that this could results in a quarter of rents being reduced in Paris. For example, a 26 square meter studio apartment in the sixth arrondissement currently renting for €1,000 a month would be reduced to €800 a month.

An optional publically backed rental guarantee for landlords will be introduced to reduce the risk of tenants falling into arrears with their rent payments.

Landlords will not be able to demand more than two months rental for a furnished property. Currently there is no limit.
Also, the definition of a furnished letting will be more precisely defined by the publication of a regulation that specifies the minimum level of furniture required and an inventory will become compulsory.

These new rules do not affect holiday lets, but this sector is also facing change. Short term lettings, usually defined as holiday lets, will need to have approval by the local town hall in areas with housing shortages. This rule already applies in Paris and other large cities but is set to be introduced nationwide.

The list of documents that a tenant needs to supply is to be standardized and there will be new controls on the charges that can be imposed on a prospective tenant for setting up a tenancy.

Letting contracts are also to be standardized and will be obliges to list specifics such as the rent to be paid and detail work carried out on the property.

Tenants will only have to give one month’s notice to leave a property compared with the two months that most agreements are currently based on.

There will also be tax reductions for landlords who build new homes to rent. France has a chronic housing shortage and the government has stated that it wants to build 500,000 new homes a year, including 150,000 affordable homes.

This article was republished with permission from Property Wire.


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