In this article we will try to address the following topics:
- What is rent control?
- How is the rent control calculated?
- What is the rent supplement?
- What do I risk if I do not respect the rent regulation?
Definitions and generalities
First of all, it is important to know that rent control is one of the key measures of the Alur law. This one was initiated by Mrs. Cécile Duflot when she was Minister of Housing under François Hollande in 2014. However, this law was suspended in 2017, before the Elan law brought back the rent control in 2019.
Previously, a landlord could freely set the amount of rent for his apartment, when it was first rented but also when there were changes in tenants. This freedom has contributed to an increase in rents over the last few decades in cities where demand was much higher than supply.
Rent controls therefore apply to all cities located in so-called “tense” areas. This framework means that when a dwelling is re-rented, the new lease cannot, with some exceptions, exceed the rent applied during the previous lease.
An additional mechanism, the rent ceiling, is applied in certain municipalities and applies from the first time an apartment is rented.
But who is concerned? Are all rentals affected by rent control?
First of all, you should know that this measure only concerns leases signed after July 1, 2019.
In addition, this measure applies only to tense areas. We consider as “tense zones” all the agglomerations of more than 50,000 inhabitants. There are a total of 28 such zones, and Paris is obviously one of them!
The other cities concerned by rent control are:
Ajaccio, Annecy, Arles, Bastia, Bayonne, Beauvais, Bordeaux, Draguignan, Fréjus, Genève-Annemasse, Grenoble, La Rochelle, La Teste-de-Buch – Arcachon, Lille, Lyon, Marseille – Aix-en-Provence, Meaux, Menton-Monaco, Montpellier, Nantes, Nice, Saint-Nazaire, Sète, Strasbourg, Thonon-les-Bains, Toulon and Toulouse.
For your information, only the cities of Paris and Lille are subject to rent ceilings.
Other municipalities will be added to this short list on June 1, 2021; these include the Plaine Commune Public Territorial Establishment: Aubervilliers, Épinay-sur-Seine, Pierrefitte-sur-Seine, Saint-Denis, Villetaneuse, Stains, L’Île-Saint-Denis, la Courneuve and lastly Saint-Ouen.
It seems likely that this list will continue to grow in the months and years to come.
As a landlord, you are not allowed to increase your rent when you change tenants, unless your rent was undervalued or you have undertaken work to significantly improve the quality of your property.
In Paris, this regulation concerns all housing except HLM and APL-approved housing.
How to calculate the amount of your rent ?
The rent control, or more precisely the rent ceiling, is calculated according to several criteria:
The year of construction
You can choose between 4 periods of construction:
- Before 1946
- Between 1946 and 1970
- Between 1971 and 1990
- After 1990
The number of rooms
Depending on the type of apartment you own (studio, 2 rooms, 3 rooms or more), the rent will be different.
Furnished or empty
The rent you can charge will be higher if your apartment is rented furnished. This is one of the many reasons why a landlord may decide to rent a furnished apartment. Don’t miss our page dedicated to tips for renting your furnished apartment.
The address of the apartment
The calculation takes into account the exact address where the apartment is located, in order to define the amount of the rent, whether it is a reduced rent, a normal rent or an increased rent.
Let’s take the example of a furnished one bedroom apartment located at 43 rue de Fleurus in the 6th arrondissement of Paris, in a building built before 1946:
For the apartment we have just taken as an example, the reference rent is 32€/square meter (m²).
Please note that the maximum rent you can charge for your apartment must not exceed the reference rent by more than 20%. This amount corresponds to the increased reference rent. In our example it is 38.4€.
The rent control framework applies to many apartments and remains the basis for calculating the rent. However, it is important to note that in addition to the amount of the rent, there is also a part of the charges paid by the owner for the co-ownership, namely the rental charges.
Indeed, the characteristics taken into account in the calculation of the rent ceiling do not take the co-ownership into account at all, which is why these rental charges are charged to the tenant. An apartment located in a condominium that has an elevator, the services of a janitor or a collective swimming pool, for example, will be presented to a potential tenant at a higher rent than another property that does not have these qualities in another condominium.
We will also see in the following point that, under certain conditions, it is possible to offer an apartment at a higher rent; we will then refer to this as a rent supplement.
What is the rent supplement ?
As the owner of an apartment in Paris, and even though you are subject to the rent control and the rent ceiling, you can still claim to rent your apartment above the amount set by the rent control.
Indeed, article 140 of the Elan law specifies that a rent supplement can be added at the request of the owner, on the pretext that the apartment would possess characteristics that could justify the addition of a rent supplement.
Although it may be subject to free interpretation, this rent supplement could be applied in cases such as the following:
- The apartment has a terrace or balcony,
- The apartment has a view on a monument of Paris,
- The apartment has luxury equipment or furniture,
- The apartment offers a feature considered exceptional, a sauna, a jacuzzi, a swimming pool…
Other elements can be added to this list, such as a high ceiling. Please note that the parameters taken into account in the calculation of the rent (location of the apartment, type of apartment, etc.) cannot be used to justify an additional rent.
The same applies to equipment or features already included in the rental charges. Indeed, as these charges are charged to the tenant, the presence of an elevator or a security service will not justify a rent supplement either.
It should be noted that the lease must mention the reference rent as well as the increased reference rent. If necessary, the additional rent must also be mentioned on the lease with its justification.
Revaluation of the rent
The Rent Reference Index (IRL, for Indice de Référence des Loyers) is calculated each year by INSEE and is used as the basis for rent reviews.
The rent can be revised every year on the anniversary date of the signing of the lease via the following calculation:
rent x last IRL reference index / IRL reference index of the previous year.
Can a tenant contest a rent supplement ? How can a tenant contest a rent ?
The tenant has a period of 3 months from the signing of the lease to contest the rent applied for the rental of his apartment.
The tenant must inform the owner of the rented accommodation by registered mail with acknowledgement of receipt that they are contesting the amount of the rent and that they would like the rent to be reviewed, failing which they may refer the matter to the prefecture.
It is then up to the landlord to prove that the additional rent is justified, in particular by invoking the specific characteristics of the dwelling as described earlier in this article.
What are the penalties for not respecting the ceilings?
If the owner offers his apartment above the increased rent, they are exposed to an administrative fine which can go up to 5000€ for a physical person and 15000€ for a legal person.
Obviously, the owner would see his rent revised downwards, this in the respect of the rent control and the rent ceiling currently in place.
We hope that this article has helped you to better understand the different rules concerning rent control and rent caps in Paris. Our team remains of course available to answer all your questions, so do not hesitate!