France has a buoyant rental market – Peter-Danton de rouffignac takes a look at how the system works for both tenant and landlord
The French rental market includes both furnished and unfurnished properties, short-stay and seasonal rentals, but in this article I will concentrate on issues of long-term letting, from the point of view of both potential tenants and aspiring landlords.
Although nearly 60% of French people own their principal residence, slightly less than in the UK (70%), there is still a substantial long-term rental market. This includes nearly 12 million households (out of a total 27 million) who choose to rent their main home, either in the private sector (57%), or due to low incomes qualify to live in properties classified as a habitation � loyer mod�r� (public sector housing).
In the private sector, some 98% of landlords are private individuals who typically own one or two properties that they let to tenants. Surprisingly, while tenants tend to remain within a habitation � loyer mod�r� for an average of 12-18 years, private tenants move more often, staying in the property for an average of less than four years.
The relationship between landlord and tenant has been described by one commentator as similar to that of an elderly couple always on the brink of divorce. However, the sector is highly controlled under French law (notably that of 6 July 1989 and later amendments) and in cases of dispute tends to favour the tenant.
The legislation concerns mainly principal homes let long-term and does not cover short-term or seasonal rentals. A variety of protections are offered to the tenant, including the right to leave at any time, provided adequate notice is given, and the right to remain until legally evicted. Even where breaches of the tenancy agreement have occurred, such as creating a nuisance or not paying the rent, the eviction process can take many months.
For their part, French landlords have in recent years been encouraged by various government tax-saving schemes (Borloo, Robien etc) to invest in properties designed specifically to be let to tenants. These schemes have, however, only had modest success with some properties being built in areas where no rental market existed; for example, being located too far from public transport and/or in areas of high unemployment.
As a result, many such properties have remained empty and untenanted with investors left repaying loans on an apartment that is often also virtually unsaleable. Rental income can rarely be guaranteed and where developers have offered legal guarantees, in practice these normally last for only a year.
Despite all this, the advantages to tenants include known and fixed costs – rent, charges, index-linked increases etc – the security of a lease and the right of renewal, mobility, the chance to live somewhere in which they perhaps cannot afford to buy, and freedom from the constraints of ownership and the cost of major renovation and repairs. Many who rent in city centres prefer to invest in (or wait to inherit) a r�sidence secondaire in the country or on the coast; planning to move there on retirement.
Impre ssive dossier
With an abundance of properties in some areas from which a tenant can choose, landlords in favoured locations can be particular about whom they rent their property to. Prospective tenants need therefore to arm themselves with an ever more impressive dossier. This can include highly personal information, which a landlord has the right to demand, such as their work contract, payslips, recent tax returns and copies of their previous rental agreement. However, tenants are not obliged to provide certain documents such as copies of bank statements or a letter from the bank confirming their financial track record.
Younger tenants may be asked to provide a guarantor (such as their parents) and the increasing numbers who work on fixed-term contracts (CDD) may find it particularly difficult, even with a record of continuous employment. The self-employed may have to provide several years’ audited accounts in order to confirm their financial stability.
Recent discussions on one of the French property forums have highlighted the position of some British residents in France, possibly retired and receiving a pension but who do not fit the standard pattern of being in full-time paid work, and in receipt of regular salary cheques. Even couples who have recently sold a property and who are ‘cash rich’ may find it difficult to rent a property without providing a (bank) guarantee. Note that in this context, the French word for caution (bancaire) differs from the d�p�t de garantie (a maximum of one month’s equivalent rent). The latter is handed over as a guarantee against possible breakages or damage, and returned at the end of the tenancy.
Although an unfurnished lease is normally for three years minimum, in practice tenants have the right to leave at any time having given adequate notice: six months in unfurnished accommodation, three months in furnished.
These periods can be reduced in certain cases such as illness, an unexpected job loss or transfer to another area. If the building owner finds, at the end of the current lease (normally three years unfurnished), that he has an urgent need to recover the property for his own occupation or that of close family (as a principal residence), then there may be grounds for asking the tenant to leave. However, these circumstances have to be proven genuine. Otherwise the lease will be renewed automatically if the tenant so wishes.
The 1989 law imposes certain obligations on the tenant to keep the property in reasonable repair and not to create a nuisance affecting other occupants. The latter has been recently tested in the French courts since the creation of the new auto-entrepreneur scheme has encouraged a number of tenants to set up a business working from home.
Normally, permission should be sought from the landlord and, if applicable, the building managers (syndic) and is not reasonably refused provided there is no disturbance to other occupants (such as frequent visitors or deliveries). An appeal court ruling of 1995 established that the mere presence of a computer, printer and/or photocopier does not of itself constitute ‘business or professional use’.
Right of access
The landlord does not have unlimited right of access to his property except in case of emergency. Some agreements may stipulate that routine visits, such as those to check the condition of the property, must be agreed in advance, and the tenant may refuse to receive visits on certain days, at weekends or after certain hours. This can prove problematic where an owner wishes to sell the property (with the tenant remaining in place) and needs to arrange visits by potential buyers.
With regard to charges associated with the building, the landlord/owner is responsible for paying the taxe fonci�re (property tax) while the tenant pays the taxe d’habitation, which is assessed according to his individual age, income etc and from which the tenant may even be exempt.
Within a co-ownership building, some charges such as those for services consumed by the tenant (water, central heating, cable TV) will normally be paid by the tenant, while the landlord remains responsible for matters such as his contribution towards the insurance of the building and any additional charges voted by the co-owners (exterior or interior painting, renovation of the lift etc).
Certain work associated with the rented property itself remains the responsibility of the landlord, including bringing it up to standard (gas, electricity etc) or to comply with safety regulations (for example, balconies, railings) and hygiene regulations, although a contribution (controlled by law, according to the size of the property) may be requested from the tenant towards the cost of improving energy efficiency.
Although the landlord may choose to redecorate and refurnish the rented property, the tenant is only responsible for exceptional wear and tear, and replacement of breakages.
Ideally, all these elements are set out in a formal rental agreement, to avoid any future misunderstandings. An important element in drawing up the lease is the survey of the premises carried out in the presence of the tenant and landlord, known as the �tat des lieux (literally ‘state of the place’), which both parties need to agree and sign. At the end of the tenancy, both parties can refer to the etat des lieux when it comes to deciding who pays for any worn or damaged items.
If the property owner decides to sell the rented property, he must give at least six months’ notice to the tenant and offer him the first option to buy (law of 6 July 1989) at the current market value. If it constitutes his main home, the tenant has then two months to accept or reject and a further two months to arrange his finances and conclude the sale. He may decide to leave of his own accord and find another rental or stay in place, in which case the property would be sold already tenanted, a proposition that can be attractive to certain investors.
This is necessarily only a brief summary of the main issues surrounding rented properties, and both landlords and tenants should keep abreast of evolving changes in the law, and in particular the special protections offered to tenants of advanced years, those on limited incomes, those affected by sudden job changes etc. Useful information sources include the government website www.anil.org and their local offices, property websites and property discussion forums.
Despite the scare stories, the statistics show that large numbers of French people live in rented properties, often by choice, and in comparative harmony with their landlords.
Peter-Danton de Rouffignac MA LLM is a property advisor based near Perpignan