End of the supervision of residential rents in Paris

The Paris rent control has been cancelled

The administrative court cancelled the prefectural orders that had established the reference rents in Paris under the ALUR law. This change came into effect on November 28, 2017. Is this going to lead to an increase in rents?

What are we talking about?

Since August 1, 2015, following the ALUR law of March 2014, the rental lease for empty or furnished housing has been subject to a ceiling: the “increased reference rent”. Landlords could therefore not rent their properties below a certain amount, calculated using a Rent Reference Index (IRL). This was based on a median rent at the district level.

Each year, prefectural orders indicated the ceilings for the coming twelve months. It is this device that the Administrative Court of Paris cancelled on November 28, 2017. The Ministry of Housing has indicated that it will appeal this decision, but it will not be suspensive: that is, the cancellation will remain in force until the next judgment.

What are the repercussions for landlords and tenants?

As of today, the rents for main homes in Paris that were covered by this framework are no longer capped. For the first rental of an apartment, upon signing the lease, the fixing of the rent is therefore free. Of course, the law of the market continues to apply its principles. It should be respected if owners want to find a tenant for their new property offered for rent. On the other hand, leases that were signed between August 1, 2015 and November 28, 2017 must continue to respect the rents entered in the contracts.

Important: the relocation rent control system still applies

On the other hand, when the lease is renewed, the conditions for reviewing the rent remain unchanged. The rent of the previous tenant is always the maximum applicable rent, except for regulatory exceptions. Landlords will not be able to increase the rent when the tenant changes. In this way, the ceiling on Parisian rents will continue to have repercussions. In fact, all apartments that were rented during this period will have their price maintained by this provision.

The rent increase is thus controlled by this provision.

Assessment of the rent ceiling in Paris

The law was more political than actually effective. It has drawn investors away from the Paris market without having a dramatic impact on the fall in prices. Landlords did not respect the law and tenants very rarely initiated proceedings against landlords. They were afraid of reprisals or of having to find a new apartment to rent in a tense market, despite the availability of a regional conciliation commission to settle disputes amicably.

Thus, there does not seem to be any particular reason to celebrate or to worry about the lifting of the rent limit in Paris. On the other hand, this will most likely reassure investors. The Rent Observatory has also published a survey on rent prices in the agglomeration outside Paris (not affected by the system), and it shows that unsupervised rents increased by only 0.1% on average in 2016.

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