Vincent Morand of Ashton KCJ Solicitors, runs through the key points to consider if you’re planning to rent out a property in France
If you are thinking about buying a property in France, especially if you are planning to move there permanently, you may be considering the option of renting for a while, so you can ensure that the area you have chosen is right for you. You may have sold your UK property but not yet found the one to buy in France. Alternatively you may already own a property and be thinking of letting it out.
When a property is being let, one of the first points to consider is whether it is going to be the tenant’s main residence – r�sidence principale. Another is whether the property will be let empty or furnished, the latter being usually referred to as location meubl�e.
The Law of 6 July 1989 applies to an empty property intended to be the tenant’s main residence. In such a situation, almost all the terms and conditions of the tenancy agreement (usually referred to as bail d’habitation) are set by the law and there is not really any freedom for the parties to negotiate their own agreement. This is why it is usual to see pre-printed contracts being used. However these should still be checked carefully. With a very few exceptions, the bail will be for a set period of three years, the tenant being entitled to its renewal at the term, unless a valid notice to quit has been served by the landlord.
Under this law, the tenant may terminate the tenancy agreement at any time but must give three months’ notice. There are a few cases where the notice may be reduced to one month, such as when the tenant is moving for professional reasons. Unless the tenant qualifies for the shorter notice, they do not have to justify why they want to terminate the bail. Notice may be served by registered letter – lettre recommand� avec accus� de r�ception – or by a bailiff – huissier de justice. The tenancy agreement should confirm to whom the notice must be served, either to the landlord or possibly to the agent if a contract for the management of the property – mandat de gestion – has been signed between the landlord and an estate agent.
The termination of a bail d’habitation under the Loi du 6 Juillet 1989 by the landlord is strictly regulated. Notice must be served at least six months before the term. This may be done either by registered letter or by a huissier de justice. As the landlord is only entitled to terminate the lease in a few cases, the termination notice must justify the reason and the wording must comply with French law. For these reasons it is usually advisable to have the notice served by a bailiff. A notice not properly served would be treated as null and void and the lease would then renew for three years. For instance, the landlord may decide to terminate the lease because he or she wants to live in the property or wants to sell it. In the latter case, the tenant is entitled to a pre-emption right: that is to say that they can buy the property for the price being mentioned on the notice.
When a property is being let out with its contents to a tenant who intends to live there permanently, French law now provides the minimum requirements for the contract to be signed in this respect. With a few exceptions, the term must be at least one year. If no termination notice is served, the contract automatically renews at its term for the same duration. Such a termination notice may be served by the landlord at least three months before the term and has to be justified. The tenant must respect one month’s notice.
If the furnished property is not intended to be the tenant’s main residence, rules are less strict. However there are still obligations, even if the property is let out for short periods of time. This is the case for instance for holiday lets (locations saisonni�res) as French law states what type of contract must be signed, what information must be provided to the tenant, especially regarding the description of the property, what payment may be requested at the time the property is booked, etc.
Especially in cities of more than 200,000 inhabitants, depending on various criteria, letting out a furnished property for short periods of time may require a prior authorisation from the local authorities and fines and penalties may apply if the rules are not respected.
In most cases, the landlord must provide the tenant with a dossier de diagnostic technique including various surveys such as a lead in paintwork survey depending on when the property was built, an energy efficiency audit and so on. When the property has a swimming pool it must have a compliant safety system, especially to avoid direct access by young children.
In any event it is also highly advisable and even sometimes required to draft an �tat des lieux at the time the tenancy agreement is signed. This document is intended to confirm the state of the property when the letting starts. Depending on the situation, it may also be wise to take photos that could be attached to this document.
If you are planning to let your own property, whatever the situation is, you should check your insurance policy carefully to ensure that you will be properly covered, especially regarding your personal liability – responsabilit� civile. In most cases, especially for a main residence, the tenant must have their own insurance policy and the landlord is entitled to require sight of a certificate of insurance – attestation d’assurance.
As owner of a property, you may want to check whether it would be suitable for you to take out an extra policy intended to cover the non-payment of the rent by the tenant. Such a policy is sometimes provided by the agent managing the property. Naturally the terms and conditions of such a policy must be carefully considered to ensure that it suits your needs.
When the property being let is located in a co-ownership – copropri�t� – the r�glement de copropri�t� should be considered to check whether there are any obligations in this respect. The same applies when there is a mortgage against the property, as its terms and conditions may prevent the owner from letting out the property, for example if it was only granted to buy a main residence.
This article is not intended to cover the position from a tax perspective but if you are planning to let your French property, you should bear in mind that, according to article 4 A of the French Code G�n�ral des Imp�ts, you will be liable for income tax in France for your income from a French source. This applies to the rent you would receive by letting your French property. Specialist advice should also be sought if the property being let out is owned via a company (such as a soci�t� civile immobili�re), especially if it is let as a furnished property, likely to be the case if it is only let out during short periods of time. If you are tax resident in the UK, you will also have to address your situation with HM Revenue & Customs. LF
This article is for general information purposes only and does not constitute legal or other professional advice. We would advise you to seek professional advice before acting on this information.