End of the supervision of residential rents in Paris
The Paris rent control has been cancelled
The administrative court cancelled the prefectural orders that had established the reference rents in Paris under the ALUR law. This change came into effect on November 28, 2017. Is this going to lead to an increase in rents?
What are we talking about?
Since August 1, 2015, following the ALUR law of March 2014, the rental lease for empty or furnished housing has been subject to a ceiling: the “increased reference rent”. Landlords could therefore not rent their properties below a certain amount, calculated using a Rent Reference Index (IRL). This was based on a median rent at the district level.
Each year, prefectural orders indicated the ceilings for the coming twelve months. It is this device that the Administrative Court of Paris cancelled on November 28, 2017. The Ministry of Housing has indicated that it will appeal this decision, but it will not be suspensive: that is, the cancellation will remain in force until the next judgment.
What are the repercussions for landlords and tenants?
As of today, the rents for main homes in Paris that were covered by this framework are no longer capped. For the first rental of an apartment, upon signing the lease, the fixing of the rent is therefore free. Of course, the law of the market continues to apply its principles. It should be respected if owners want to find a tenant for their new property offered for rent. On the other hand, leases that were signed between August 1, 2015 and November 28, 2017 must continue to respect the rents entered in the contracts.
Important: the relocation rent control system still applies
On the other hand, when the lease is renewed, the conditions for reviewing the rent remain unchanged. The rent of the previous tenant is always the maximum applicable rent, except for regulatory exceptions. Landlords will not be able to increase the rent when the tenant changes. In this way, the ceiling on Parisian rents will continue to have repercussions. In fact, all apartments that were rented during this period will have their price maintained by this provision.
The rent increase is thus controlled by this provision.
Assessment of the rent ceiling in Paris
The law was more political than actually effective. It has drawn investors away from the Paris market without having a dramatic impact on the fall in prices. Landlords did not respect the law and tenants very rarely initiated proceedings against landlords. They were afraid of reprisals or of having to find a new apartment to rent in a tense market, despite the availability of a regional conciliation commission to settle disputes amicably.
Thus, there does not seem to be any particular reason to celebrate or to worry about the lifting of the rent limit in Paris. On the other hand, this will most likely reassure investors. The Rent Observatory has also published a survey on rent prices in the agglomeration outside Paris (not affected by the system), and it shows that unsupervised rents increased by only 0.1% on average in 2016.
Great collaboration with Patrick Martinez! Very professional, relevant and friendly, I highly recommend him.
I needed support for this real estate project due to lack of time and the need to be reassured when choosing the property. I opted for Tell me about Paris, and I don't regret it. Susan who helped me was perfect. Always responsive and with good advice, she helped me well in the procedures and the research, she was always present, which allowed me to quickly find a very interesting property and in Paris what was unexpected for me. I highly recommend their support!
Not living in Paris, we called on Susan from Talk to me about Paris to find our footing. The exchanges were very pleasant thanks to her quality of listening, her availability, her professionalism, her responsiveness and her interpersonal skills. Its assets served our research and we were lucky enough to quickly find the rare pearl despite our requirements. Her knowledge of the Parisian market meant that she directed us to a neighborhood that we did not have the idea of selecting and we do not regret for a second having listened to her.
