11. What can I Charge in Rent?
11.1. New Tenancy
As a general rule, the level of the rent on a new tenancy can be freely determined between a prospective tenant and the landlord.
The only controls on the level of the rent on a new tenancy are what the market is prepared to pay.
Nevertheless, since 1st August 2012 controls have been imposed on rental increases on new unfurnished lettings within the major towns and cities of France, provided the property is the main home of the tenant.
These controls mean that the rental on the new letting cannot be any higher than that of the previous letting, adjusted by the inflationary increase in the rental index - the Indice de Référence des Loyers (IRL) .
There are exceptions to the rule, such as where major works have been undertaken, or where the previous rent was manifestly too low in comparison with other local rents.
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 specific controls on further increases in the level of the rent during the period of the tenancy.
Since 1st July 2019, in Paris and in certain other major cities, there is a cap on the maximum rent that can be charged, in a legal control called l’encadrement des loyers.
The rent levels are set district by district, size and age of construction. Information on the maximum rental levels in Paris can be found at Loyers de Reference.
It is possible for a landlord to justify a rent above the maximum, but only provided the property has exceptional characteristics from other properties in the area.
Since January 2021, in 28 conurbations of housing stress, a landlord is not permitted to increase the rent on a new tenancy (or renewal) if the thermal insulation value of the property is greater than 331 kWh per square metre per year, i.e. a F or G class dwelling.
Those areas 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, Paris, Saint-Nazaire, Sète, Strasbourg, Thonon-les-Bains, Toulon, Toulouse.
Since January 2022, it is also possible to let a property at a rental under the market rate and obtain tax relief. The scheme is called 'Louer abordable'. Under the scheme a landlord can obtain tax relief of 15% if they accept to let 15% below the market rate, or 35% if they let at 30% below the market rate. To benefit you need to sign up with the housing agency ANAH, for a period of at least 6 years.
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