Guide to Letting Property in France

11. What can I Charge in Rent?

1. New Tenancy
2. Annual Increase
3. Improvement Works
4. Renewal of Tenancy
5. Service Charges

11.1. New Tenancy

i. Areas of Housing Stress

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. In addition, if there are certain elements of the property in poor condition, or it is a F or G energy efficiency graded property, the increase cannot be applied.

ii. Poorly Insulated Dwellings

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.

This law applies nationally from 25th August 2022.

Specifically, the landlord is not permitted:

• to apply a rent higher than that of the previous tenant, when establishing a new lease;

• carry out the annual review (set of the indexation clause) of the rent during the lease;

• increase the rent following work to improve the accommodation which is the subject of an agreement, by an express clause

• propose a rent increase to the tenant when renewing the lease, in the event of manifestly undervalued rent.

Nevertheless, for rental contracts for 3 years renewable concluded before 24th August 2022, rent increases will remain possible, until tacit renewal or possible renewal of the lease.

From 1st January 2023 a property that consumes more than 450 kWh/m2/year cannot be used for letting purposes.

With effect from 1st January 2025 this applies to all those classed 'G' (420 kWh/m2/year), to those classed F from 1st Jan 2028 and to those classed E from 1st Jan 2034.

iii. Affordable Rentals

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.

iv. Controls on Adverts

As of 1st April 2022, there are controls on advertisements made by private individuals for properties to rent. The advert must state:

• the amount of the monthly base rent (loyer de base);

• the amount of the increased reference rent (loyer de référence majoré): the maximum rent authorised by the rent control programme;

• the amount of any rent supplement (complément de loyer): landlords are entitled to add this supplement when special comfort and location characteristics justify it. This supplement can enable landlords, if certain conditions are met, to raise the rent above the increased base rent.

The corresponding amounts must be preceded by the indication (zone soumise à encadrement des loyers.

The font size of the amount of the monthly base rent must be larger than the increased reference rent and the potential rent supplement.

You can read more in the Chapter on 'Advertising - Finding a Tenant.'

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