Our Practical Guide for Non-Residents leasing Furnished Rentals in Paris: Part I

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Paris is a city loved and visited by the whole world. To protect tourism, the government is preserving historic buildings by preventing the construction of new housing. The real estate supply is therefore permanently limited and the practice of renting in furnished houses competes directly with the hotel sector.

As the supply of homes is limited, a rise in rents would make Paris unaffordable for its inhabitants. This is why the administration, wanting to maintain a balance between hotels and private rentals, had to put in place additional procedures for authorizing and supervising rental revenue: this is the ALUR Act of 24 March 2014. As such, the legal flexibility enjoyed by furnished flats has been moderated by the ALUR and the Macron law of 6 August 2015.

However, all is not lost! There are still several ways to rent a furnished property, and several advantages in doing so:

The regulation favours the owner if their property is rented furnished: the termination of the lease and the recovery of the property by the owner is much easier than for an unfurnished leased property. There is also the reduced risk of non-payment. Many companies lease furnished property on behalf of their employees, or parents may pay rent on behalf of their student children. You can also count on a shorter lease period, which tends to be around 1 or 2 years.

So, how do we define a “furnished property”?

A furnished property is defined by law as a functional accommodation, equipped with the appropriate furniture to enable the tenant to sleep, eat and live properly. The accommodation must be up to standard: your home must not present any risk to the physical safety or health of the tenants.

Decree 2015-981 of 31 July 2015 establishes the basic list of furniture that must be present:

• Bedding including duvet cover
• Blinds/Curtains in bedrooms
• Dinner plates
• Oven or microwave
• Fridge and freezer (or at least a refrigerator equipped with a compartment allowing a temperature of less than or equal to -6 ° C)
• Cooking utensils
• Table and seats
• Storage
• Lighting
• Household equipment specific to the residence

The standard contract for a furnished apartment:

Since 1 August 2015, the lease contract must comply with a standard contract defined by law. It must include mandatory information such as the designation of the parties, the purpose of the lease, the duration, the financial conditions (the amount of rent, the amount of rental charges, etc.) and the distribution of rental fees between the lessor and the tenant.

There are several administrative obligations for lessors of furnished property defined by Decree 2016-382 of 30 March 2016:

• Prior to any change in the use of the rental (Example: you rent your accommodation for short periods to clients who do not elect domicile), you must obtain authorization from the mayor,
• A detailed inventory of the furniture, to be given to the tenant with the handover of the keys, must be kept,
• A technical diagnostic report (DDT) must be carried out before the lease period. The DDT can include up to 4 documents: Energy Performance Diagnosis (EPD), Lead Exposure Risk Contract (Crep), asbestos diagnosis and a gas and electricity assessment. From January 2018, this will become mandatory for all homes, and as of July 2017, for all homes built before 1975.

How do you work out the price of the rent?

Since 1 August 2015, the rent cap has been experimentally adjusted for housing located in intramural Paris (in one of the twenty arrondissements) and Lille. This limit applies to both furnished and unfurnished at the time of leasing or renewal. The rent is determined according to several criteria including the geographical location of housing, the number of main rooms, era of construction and type of rental (furnished or unfurnished). For cases in which the current rent exceeds the cap, the landlord may apply a supplement to rent where it is justified by the “characteristics of location or comfort of the residence”. This is allowed provided that these characteristics are not already taken into account in the rent and are decisive in fixing the amount of rent compared to other residences in the same geographical area.

For example: a flat of 45 m2 including 3 rooms built before 1946 in the district of the Sorbonne in Paris (6th arrondissement)

The reference rent is € 27.2 / m2, ie a monthly rent ceiling of € 1224.

 And what about agency fees?

As of September 15, 2014, the ALUR law capped agency fees charged to tenants by real estate agents. The fees are capped according to the number of square meters of living space and location.

The lessor must bear all of the fees except for 4 services to be shared between the lessor and the tenant:

• Visiting the residence,
• The drafting of the lease,
• The constitution of the file,
• Establishment of the inventory.

The amount of these fees must respect a double limit. It must not exceed the amount paid by the lessor, and must be less than or equal to a limit established per square meter of living space of the housing proposed for rental. The limit varies depending on the location of the property.

For example: for a housing located in Paris of 75 m2

The agency fees are capped at 900 € or 12 € per m2.

A home is considered to be the principal residence of the tenant when it is occupied for at least 8 months a year (except for professional reasons, health reasons, etc.).

NB: Accommodation leased by a student is considered to be the principal residence of the student

Where the property is rented as a principal residence, the lessor must comply with several rules, including:

• A standard lease contract as detailed in decree n ° 2015-587,
• The precise rules concerning the lease fixed by decree for the establishment of the inventory,
• The minimum duration of a contract is 1 year, or 9 months for students,
• The security deposit must not exceed 2 months of rent and must be paid immediately upon signing the lease.
• At the end of the lease, the landlord must return the deposit to the tenant within 2 months from the return of the keys, or 1 month when the inventory is in accordance with the state of commencement,
• With regard to rental charges: These are provided for in the lease contract and their amount must not be disproportionate in relation to the charges which the tenant would have incurred.

Concerning the renewal of the lease:

The lessor may change the terms of the lease if he notifies the tenant at least 3 months before the due date. He may also terminate the lease, provided he has a legitimate reason, 3 months before the due date of the contract. In some cases the landlord cannot object to the renewal of the lease. This is the case, for example, when the tenant is over 65 years of age and has financial resources which are below the threshold set by decree.

The tenant can terminate the lease at any time subject to one month’s notice, including a contract signed for a period of 9 months, when the location is granted to a student.

How should disputes be resolved?

The Departmental Conciliation Commission is responsible for all disputes relating to rent, holidays, inventory and furnishings, security deposit and repairs, with a branch for each department. The lessor or the tenant can claim at any time, except in certain cases (in particular in the event of a dispute over the revaluation of the rent at the renewal of the lease, 4 months before the expiry date of the lease).

If you think that this matter applies to you, it is important to ensure substantial understanding of all relevant information, facts and procedures. Here at Maupard, we would be more than happy to advise you on the next steps and to allow you to make the most of these opportunities.

Do not hesitate to contact us by telephone on +33 (0) 1 53 93 94 20 or by e-mail to [email protected], so we can work out the needs of your business. Our team of experts is here to answer any questions you may have.