Champs Elysees, Paris

Paris rent controls pilot government’s agenda

Tuesday, September 8, 2015

Paris landlords and tenants’ advocates appear united in discontent with the rent controls that went into force last month. Real estate agents argue that the reference rents underpinning allowable rates are too low, while a national consumers’ group maintains the new regulations are too vague and problematic to enforce.

As the Paris Property Group reports, caps now apply on new residential leases and lease renewals, dictating that rents cannot exceed the reference rate by more than 20 per cent nor undercut it by more than 30 per cent. The French rental oversight body, Observatoire des Loyers de l’Agglomération Parisienne (OLAP), estimates that nearly 20 per cent of the rents charged in the city should be adjusted downward to comply with the caps that went into effect on August 1, including about six per cent that should drop by at least 100 Euros (CAD $147.00).

The Paris rent controls respond to a 42 per cent increase in the city’s average rents over the past decade and serve as a test for nationwide measures, which François Hollande’s government plan to introduce next in Lille and Grenoble. To begin, OLAP established the benchmark rates for 80 distinct city districts based on a survey of leases signed in 2014, but caps — cited in Euros per square metre — will be reset annually.

The new rules also allow landlords to charge a supplementary amount above the cap for special features of the property that make it superior to others in the vicinity — flexibility that the Association nationale de défense des consommateurs et usagers (CLCV) condemns as open to abuse since there is no legal definition of what constitutes a special feature. The group further criticizes the required bureaucratic and legal process for challenging excessive rents, charging that the cost and complexity will hinder students and other tenants with low incomes.

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