9. What can I charge in Rent?

1. 9.1 New Tenancy
2. 9.2 Annual Increase
3. 9.3 Improvement Works
4. 9.4 Renewal of Tenancy
5. 9.5 Other Charges

9.1. New Tenancy

The only controls on the level of the rent on a new tenancy are what the market is prepared to pay.

The level of rents varies enormously over the country, and they can even do so within regions for similar properties.

So it may not be easy to determine the market rent for your property.

You need to look at local adverts to see the rents that are being advertised and visit some of the advertised properties to see how they compare with your own!

Once a rent has been agreed, and a tenancy agreement has been signed, there are then very specific controls on further increases in the level of the rent during the period of the tenancy.

9.2. Annual Increase

It is normal practice to include in the tenancy agreement for an increase in the rent to take place each year, based on an index of price increases.

In the past, the price index normally used for the annual rent increase was that for construction costs.

However, with construction costs rising significantly in recent years, in January 06 the Government introduced a new index, which was a weighted composite of three existing indices - cost of living, cost of construction and cost of maintenance/improvement.

Since January 08, this composite index has been abandoned, as it was also still causing rents to rise too rapidly.

The new index is merely the cost of living index, less increases in tobacoo and and rents.

It is published each quarter by the government statistical agency called ‘INSEE’.

The formula for calculating the increase in rent is the average over the last four quarters of the increase in the index.

Accordingly, the maths work as follows:

New Rent = (R x Ii) /Iii

where:

• R = the amount of the current rent
• Ii = the value of IRL index for current period
• Iii = the value of IRL for same period previous year

More simply, you can also refer to the INSEE web site and obtain details of the quarterly indices.

The IRL must be used for both furnished and unfurnished lettings, provided in the latter case, the property is the principal residence of the tenant.

9.3. Improvement Works

The tenancy agreement may also provide that the rent should be increased by an agreed amount (or formula) following certain improvement works that may be carried out by the landlord.

These works, and the details of the new rent, should be set out in the tenancy agreement.

The works cannot be those that the landlord is otherwise legally required to undertake in order to bring the property up to a habitable standard.

Neither can the landlord unilaterally decide to undertake improvement works and impose a rental increase on the tenant. Nevertheless, they are entitled to carry out improvement works if they consider it reasonably necessary to do so.

Alternatively, the tenant may themselves request certain improvements to the property for which a mutually agreed rent increase can be applied.

9.4. Renewal of the Tenancy

In the event that the landlord and tenant agree to renew the tenancy at the expiry of the initial term then, ordinarily, the rent cannot be increased on renewal other than through the normal process set out above.

However, if the landlord can demonstrate that the rent level is manifestly below the level of comparable rents for similar properties in the area then they are entitled to propose an increase to the tenant.

There are detailed procedures and timescales for this process and, in the event that agreement cannot be reached between the landlord and tenant, the matter can be referred to the Commission Départementale de Conciliation (CDC) based in the préfecture.

The landlord cannot impose the increase on the tenant. However, in the event that agreement cannot be reached at the CDC, then the matter can be referred to a court of law for decision.

9.5. Other Charges

In addition to the basic rent, the landlord is permitted to make a charge for any services that may be provided to the tenant.

Charges are more likely to be applicable in a block of flats served by communal services, but could also include gardening and related services in a single dwelling.