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(Partner article) Do you own one or more property (s) in France? You certainly know that rent control is back in so-called strained areas, where supply is scarce and rents are high. Before renting its property, any owner should consider the question of rent control, because there are different conditions of application.
Rent management: what is it?
Rent control is a law that limits the price of real estate rents in strained areas. This legislation entered into force in 2015 as part of the Alur law and was canceled in 2017 by the Administrative Court of Paris. Two years later, with the Elan law, the rents are back.
Big cities like Paris, Lyon and Bordeaux attract a large number of real estate investments and especially rental investments. Indeed, Lyon and Bordeaux, rents have risen 8% since 2015, according to SeLoger. In Paris, before the implementation of the law, rents had increased by 50% between 2005 and 2015. The rents are therefore present in these cities, or at least in part of the city or the metropolis .
How is the reference rent calculated in Paris?
Reference rents are fixed by the Rent Monitor every year, according to the type of rental, the structure of the property, and the year of construction of the building. It is on this basis that an owner can fix the amount of rent or the revision of it. According to the law, the lease must indicate the reference rent as well as the reference rent plus. The latter is equivalent to the reference rent + 20%.
In the regions concerned by this legislation, the rent of a property is limited in the case of a new lease or renewal. If the property was occupied during the last 18 months, the rent of the new tenant can not exceed that of the old. But, if the property was empty for more than 18 months, the landlord sets the rent amount freely.
What about sanctions?
The Elan law provides a penalty for owners who do not respect the framing of rents. Any lessor who sets a rent higher than the reference rent increased may be fined up to € 5,000 for individuals and € 15,000 for legal persons. This penalty is applied if the prefect is notified of non-compliance and the landlord does not lower the rent in time.
As for late payment of rent, certain conditions are to be known. For any lease signed after March 27, 2014, no late fees can be applied by the landlord to his tenant, whether it is a furnished or empty property. However, if the tenant often pays his rent late, the landlord may not renew his lease.
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