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Planning Controls on Furnished Holiday Lettings

Wednesday 02 July 2014

Second home owners in large towns and cities of France are required to obtain the consent of their local council to use of the property for furnished holiday lettings.

The letting of furnished accommodation in France has traditionally been a more attractive proposition for prospective landlords, due to its lighter regulatory framework and potential for a better return than for unfurnished lettings.

However, over the years the rules have tightened and the competition has increased.

Insofar as the regulations are concerned, since 2006 a tenant of a furnished letting who rents the property as their principal home has the same strong rights of security of tenure as tenants of unfurnished accommodation.

Short-term or holiday lettings have generally given much greater grounds for maneouvre.

Traditionally, such lettings have been located in rural areas, seaside towns or skiing resorts, but over the past decade there has been a trend for such lettings to appear within some of the main city destinations of France. These lettings may be over a day, a weekend, a week or a month or more.

The consequences of this trend have begun to alarm the authorities, notably in Paris, where there exists a shortage of rental properties to rent as the principal home, with the result that rents for such properties are very high.

As a result, in 2006, a law was passed which gave local councils in urban conurbations with a population of at least 200,000 (as well as Hauts de Seine, Seine Saint Denis and Val de Marne) to require that landlords seeking to use their property as a 'location meublée de courte durée/location meublé touristique' submit an application for approval of change of use.

Under the law any change of use of an existing residential property for such lettings could be made conditional on the compensatory investment in the transformation and change of use of a commercial premises for residential use, which must be within the same arrondissement. Failure to do so is subject to a fine of up to €25,000.

In effect, what the law stated was that the use of an existing residential property for a short term lettings ceased to have residential planning use, becoming thereafter a commercial property, more related to the hotel sector.

The requirement does not apply to owners who occasionally let out their own principal residence.

For the most part this law has lain dormant, as local authorities have been unwilling to make use of it. Many thousands of second home owners in the large towns and cities of France let out their properties on a short-term basis, without making an application for change of use.

Many also fail to do so as the lettings are frequently a cash business not declared to the authorities. Very little, if anything, is done about it.

Except, that is, for the city of Paris, who in recent years, have been determined to clamp down on the improper use of residential properties for short-term use, although their ability to control the activity has been hampered by a shortage of enforcement officers and powers of entry.

It is estimated that around 20,000 properties in the capital may be let in this manner, around 20% of the private rental stock. Many of the properties are located in the smart areas of the city, often the second homes of well-healed expatriates and Parisians.

Loi Alur

With the passage of the loi Alur (Accès au Logement et un Urbanisme Rénové) earlier this year, there have been some changes to this regulatory framework.

This law has given greater precision to the rules of the game, although it is likely to have less practical consequences than many had feared, as not all of it was approved by the Constitutional Council.

i. Definition of 'Short-Term Letting - The first thing the new law does is to give a clearer definition to short-term lettings, which it states is "le fait de louer un local meublé destiné à l'habitation de manière répétée pour de courtes durées à une clientèle de passage qui n'y élit pas domicile constitue un changement d'usage au sens du présent article."

Unfortunately, it does not specify what it means by 'courtes durées' so it is conceivable that any letting less than one year (9 months for student lettings) would be classified as such a property, provided it was not the principal home of the tenant.

ii. Definition of 'Principal Residence' - Second, some greater precision is given to the term 'principal residence', which under the law is now the property which a person occupies for at least 8 months of the year. In such cases where the owner of the property occupies it for at least 8 months of the year, no application for a change of use is necessary. This means that in such circumstances the property could be let out for four months of the year without the need for a local authority authorisation.

iii. Seasonal Lettings - Third, local authorities in those areas affected by the change of use regulations are granted discretion to set up arrangements that grant owners the right to let out on a seasonal basis, without the need for an application for change of use. This regime is called 'autorisation temporaire', substituting for the application for change of use - a déclaration préalable pour changement de destination. In effect, under the discretionary authorisation, no change of use takes place, at a stroke also removing the onerous and impractical compensatory requirement.

iv. Enforcement - Fourth, the enforcement officers engaged by the local councils to monitor application of this law are granted powers of entry to inspect premises, something specifically requested by the Mayor of Paris.

v. Smaller Councils - Fifth, the law grants other councils in smaller towns, beyond those listed, the discretionary power to adopt these rules, where they consider there is a problem and a shortage of rental accommodation. At this stage it is not envisaged many, if any, councils will adopt the powers.

vi. Co-ownership Properties - Sixth, the draft law provided that landlords in co-ownership properties were obliged to obtain the consent of the other co-owners for a change of use, a law which was struck out by the Constitutional Court. Nevertheless, the owners remain bound by the regles de copropriété, which generally require consent to use other than personal use is required, a rule than many landlords fail to heed.

vii. Websites - Finally, websites which advertise these sorts of properties (such as Airbnb, HomeAway, HouseTrip and Abritel) are now obliged, not only to inform owners of their legal obligations, but to obtain from them a declaration that they have complied with the law.

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