11. What can I Charge in Rent?
- New Tenancy
- Annual Increase
- Improvement Works
- Renewal of Tenancy
- Service Charges
11.2. Annual Increase - L’Indice de Référence de Loyers (IRL)
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.
If no revision clause is included then no increase in rent is permitted, whether or not the property is furnished or unfurnished.
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, the Government introduced a new index, which is merely the cost of living index, less increases in tobacoo and and rents.
The index is called L’Indice de Référence de Loyers (IRL).
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:
- 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.
Since January 2021, in 28 conurbations of housing stress, a landlord is not permitted to increase the rent 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.
Commencing 24th August 2022, this law applies to all properties across the country, whether let furnished or unfurnished, provided the property is the principal residence of the tenant.
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.
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