Rent Controls in Paris Annulled by Court
Thursday 07 December 2017
A French court has annulled rent controls introduced in Paris in 2015, a month after a similar ruling concerning the city of Lille.As a result of the decision, landlords in Paris are no longer obliged to respect a ceiling rent (loyer de référence) when they rent out a property.
This measure applied to all furnished and unfurnished rentals used as the tenant's principal residence located in the city of Paris for leases signed since the summer of 2015 as a result of new legislation on l'encadrement des loyers. Holiday lettings and those where the property is not the principal residence of the tenant are exempt from rent controls.
The Paris Administrative Court had been approached both by bodies hostile to the control of rents and by an association that wanted to extend it to the Paris conurbation.
The court considered that "by fixing the reference rents only for the commune of Paris, the préfet of the Île-de-France region committed an error of law".
According to the judge, the préfet should have extended the framework to the whole of the Parisian 'zone d'urbanisation continue', an agglomeration of 412 communes designated as an area of housing shortage, as provided for by the Loi Alur 2014.
This reasoning is the same as that of the Lille court, who decided in October to cancel the rent control framework in the city.
As a consequence, for leases signed since November 28, 2017 the rent of an apartment located in Paris no longer has to comply with a rent ceiling. For leases signed between August 1, 2015 and November 28, 2017, nothing changes, as leases signed prior to the court's decision must respect the rent set out in the contract.
The Government has decided in both cases to appeal.
In a press release, the City of Paris stated: “The end of the rent framework would be an injustice that is all the more worrying because it would penalize young people and students, single-parent families and middle-class families, who were the main winners of this measure. The State must appeal by requesting a stay of execution, and the law must be amended to ensure the legal certainty of the rent framework.
In response, the government announced that it will appeal and that "measures will also be introduced to address this issue".
However, it is questionable whether these rent controls will reappear. Not only is there the technical difficulty of producing rental references for the entire Paris conurbation (estate agents are already resisting providing the base information for the city), but some local mayors are not enthusiastic about it. It was planned that the measure also be introduced in other areas of housing shortage in France in 2018.
Nevertheless, within these zones tendues* there are legal controls that remain in place, In these areas, on the re-letting of a property a landlord is obliged to maintain the rent at the same level as the previous tenant unless there had been no increase in the past year. Even if there was no increase the rent can only be increased by reference to an index, called the L’Indice de Référence de Loyers (IRL).
*Zones Tendues : 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 article was featured in our Newsletter dated 07/12/2017