(sponsored article) New laws are developed, presented and sometimes adopted in the real estate sector according to the context and changing needs. The year 2019 saw the Elan bill (also called "housing law"), disrupting the sector. Whatever your real estate project, it is interesting to understand what this law is, and what changes will be implemented by 2020.

Understanding the Elan law and its objectives

On July 25, 2018, the Senate passed the Elan law (evolution of housing, development and digital), which succeeds the Alur law of 2014. The latter has two main objectives: to free the construction and protect the most fragile . This project is led by Jacques Mézard and Julien Denormandie. It has been built and showcased to better meet the current needs of the real estate industry.

The 4 main axes of this project are the rise of construction, the reform and optimization of the social housing sector, the work on mobility and social mix, and the improvement of the living environment.

What will be the main changes planned before the end of the year?

As its name suggests, the Elan Act touches on several aspects of the real estate industry. What measures of this law should be retained? And what changes are expected for homeowners and investors by the end of 2019?

The framing of rents

The Elan law is inspired by the 2014 Alur law in relation to rent supervision. Indeed, the new housing reform retains the main features of the previous reform. In fact, in 2019, housing accounts for an average of 24% of the household budget in France (around 661 euros), according to the Sofinscope barometer.

Thus, the year 2019 implements, experimentally, the framework of rent management in major cities, such as Paris (rents are again supervised since July 1), Lyon, Aix-en-Provence and Marseille. In addition, cities with more than 50,000 inhabitants will be able to apply to join the scheme (provided that there is a gap between private rent and social housing).

This measure prohibits landlords from setting rent in excess of 20% of the reference rent set by independent observatories (this is a median rent per square meter, based on the number of rooms and the time of construction good). Donors not submitting to this regulation will be fined 5,000 euros (15,000 euros for companies). In addition, a rent will be considered as undervalued if it is reduced by 30% compared to the reference rent.

The text also targets social housing. With the aim of building between 100,000 and 120,000 new social housing units, the government is increasing the number of public housing units sold from 8,000 to 40,000 per year.

Another point of this reform which was voted by the Assembly is the transition to 10%, compared to 100% in 2005, of new housing accessible to disabled people. 90% of housing will be adaptable, or so-called "evolutive".

The mobility lease

In addition, under the Elan law, tenants and landlords will be granted more freedom through a new type of lease called the mobility lease.

This measure, put in place at the end of 2018, allows homeowners to rent their property over a very short period of time, and no longer for a year (or nine months for students). Donors will be able to fill any rental vacancies by renting to specific tenant profiles (in vocational training, internship, professional mission, employees in fixed-term contracts, etc.).

These leases will have to last between 1 and 10 months, and the lease will not be renewable. If it seems rather advantageous, it should be mentioned that with this new type of contract, the lessor will not be able to demand a deposit. In addition, the tenant can give leave of his apartment at any time, with a month's notice, but the owner will have to commit until the end of the lease.

Seasonal rental

The Elan law also plans to strengthen the measures and increase the penalties for tourist rentals, in order to limit the rise, which has a negative impact on the property market, and causes, among other things, an increase in rents and rent. price of goods. Thus, in twenty French cities, such as Paris, Lyon, Bordeaux, Lille, Nice and Marseille, donors not registered at the town hall face a fine of 5,000 euros. In addition, owners can rent their principal residence within a limit of 120 nights a year, at the risk of incurring a fine of 10,000 euros.

Attention to indecent rental housing

In addition, a measure is planned to limit the rental of indecent housing. Thus, the "sleep merchants", ie any lessor renting property that does not meet the criteria of decency, would be subject to heavy penalties: tax fines, confiscation of the property, prohibition to acquire another property for 10 years, or at least, an administrative penalty of a sum to be paid daily, until development work is done to make the property safe and decent.

To know : a good is considered indecent in the following cases, among others:

  • It has less than 9 square meters of living space and a ceiling height of 2.20 meters.
  • Electricity, heating and sanitary are not up to standard.
  • The property affects the physical security or the health of the tenant.
  • Lack of hygiene or sanitation (damp rooms, harmful …)
  • The spaces are exposed to lead or there is a presence of asbestos.
  • Running water does not work.
  • The rooms do not have windows.

The Elan law also focuses on the transformation of offices because in France, 4 million m2 of offices are vacant. As a result, the standards of this type of transformation will be relaxed. In addition, devices will be put in place to encourage the owners of these spaces to renovate them.

Almost all of the measures mentioned above are expected to come into effect before the end of 2019.

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My expat is present in Paris, Bordeaux, Lyon and Marseille, and can therefore support you in your investment project in each of these cities.

Do you have a real estate investment project in France? Contact Us.

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