Differences in European Renting: France

Holiday Lets May 20th, 2015

Residential lets in France are not for the faint hearted investor

French residential lets are governed by a legal system that strongly favours the tenants. Buying a buy-to-let in France should not be taken lightly.

Rent

  • Rents can only be revised once a year and only if a carefully crafted clause is in the contract
  • Any increase in rent cannot be above the increase of the four-quarterly average of the INSEE index of construction costs.
  • It is the tenants legal responsibility to take out home insurance
  • At the end of the contract the owner can only raise the rent, once he has demonstrated that the rent is low for the area. The landlord must demonstrate this by showing at least 9 comparable residences, each with extensive details – exact addresses, surface areas, state of decoration, date of construction, time during which the residences have been rented, and rental amount.
  • An increase of rent above 10% must be spread across 6 years despite a contract being less than 6 years
  • Any rent disputes must be settled by a free conciliation service and if a compromise cannot be reached the courts

Deposits

  • The tenancy contract may stipulate a deposit of not more than two months’ rent, and only if the rent is not paid in advance.

With French residential lets, what rights do landlords and tenants have especially with regard to duration of contract, and evictions?

  • An unfurnished property contract has a minimum duration of three years (if the proprietor is a person), or six years (if the proprietor is a company or society) – An individual owner can make a shorter contract (one year minimum, except in the special case of holiday lets) only if he needs to recover the property for professional or family reason
  • furnished property contract duration is for one year; the contract is automatically renewed, unless notice has been given by either side – furnished contracts are less regulated, deposits, charges, the obligations of landlord and tenant, and the documents to be attached to the contract.
  • Furnished property is taxed as professional income, and is exempt from value added tax. The owner is liable to pay local taxes.
  • In both cases during the contract, the tenant can leave any time he wishes, subject to two, or more commonly, three months´ notice (reduced to one month if the tenant loses his job, is over 60 and in bad health, etc). The landlord is not free to give such notice.
    • In both cases when the contract ends, the owner can only re-occupy the property if:
      • He or a member of his immediate family intends to live there
      • He intends to sell
      • For another serious and legitimate reason, such as that the rent has not been paid, or the tenant has not taken home insurance, or abuses his rights to use the dwelling
    • Notice must always be given at least six months before the end of the contract. It must be sent by registered post or by a bailiff.
    • If the landlord intends to sell, he must send a copy of the offer (including the price) to the tenant, who has a priority right to buy.
    • The tenant can rarely be evicted before the term ends – Even non-payment of rent, the landlord has to wait till the end of the term. Complex conditions must be adhered to for an eviction to happen.
    • A shorter procedure exists if the contract includes a resolution clause (clause resolutoire), but this can only cover:
      • non-payment of rent
      • non-registration of home insurance
      • A resolution clause allows the immediate termination of the contract after a two months’ notice, if the specific obligation fixed in the contract is not satisfied.
    • The contract (le bail) must be in writing – There are a number of obligatory and forbidden clauses to be included.

    How effective is the French legal system with residential lets?

    Tenancy law is enforced before the courts. Procedures are long, the courts are saturated, and lack essential powers.- Average time to evict is 226 days

    • No one can be evicted during winter
    • Judge often set a grace period of 6 months for the landlord to ask tenant to leave
    • Tenant has then another two months to leave. The tenant can ask for a further delay of 3 months to 3 years if serious hardships are fallen upon

     

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