What does it mean to be a property owner and a landlord in France?
What does it mean to be a property owner and a landlord in France?
Things to keep in mind if you've decided to rent out your property in France
France has very tight rules on property rentals. And those rules are also quite complicated. So, you need to know what they are and how they apply to you, whether you own an investment property, or a holiday property that you want to let out from time to time.
If you rent out your property
There are two different regimes for long term rental in France, depending on whether you let furnished or unfurnished. There are various legal cases concerning the difference, but effectively the test is whether a tenant could move in with just a suitcase - a furnished flat needs to have all the kitchen utensils and equipment as well as bedding, towels and of course furniture.
If you let unfurnished, the minimum period for a lease is three years. With furnished accommodation, that's reduced to just one year.
As a landlord, you can only end the tenancy before the end of the term if • the tenant breaches the conditions of the lease, • you need to sell the property, or • you want to move into the property yourself.
You'll need to give a notice period of six months for unfurnished and three months for furnished leases. Additionally, to end a lease you need to give that notice six (or three) months before the end of the tenancy and not a day later, or the tenancy will automatically be renewed. (If you can't remember to do that… it's time to find a rental agent!)
Additionally, there are two special protections for tenants. One is the trève hivernale or winter ceasefire - you can't evict a tenant between 1 November and 31 March. (Because of the coronavirus crisis, it's been extended to the end of May this year.)
The second is for tenants over 65. If you want to evict a tenant over this age, you must find suitable alternative accommodation for them first. This is all quite a heavy onus on the landlord compared to some other countries' rental regimes. And it gets worse, because the tenant can give you notice at any time for any reason, with a shorter notice period - three months for unfurnished, and just one month for furnished accommodation.
What do you have to offer?
The main onus on the landlord is to offer a 'logement décent' as defined in law. For instance, the minimum surface area need to be at least 9 square metres for a single person apartment, with a minimum ceiling height of 2.2m, and that increases to 16 m2 for two tenants, and then by 9 m2 for each additional person. That's pretty small though - just enough for a bed, a kitchenette, a very tiny shower cubicle and a wardrobe.
The other rules likewise are pretty basic; a source of heating, hot and cold running water, a kitchen, and a lavatory that is separate from the kitchen. (Just in case you thought having the toilet next to the fridge was a great idea, right?) However, most lettings agents will expect more than the legal minimum, and you should be guided by their knowledge of the local market.
When you rent a flat, you'll also need a DPE (energy performance report) for a new lease, and for renewing any lease that's longer than four months. If your property was built before 1949, you'll also need a CREP report detailing any exposure to lead.
Another issue for some landlords is that long-term tenants in France often don't bother much about the decorative repair of the property they rent. If you get a property back after seven or eight years, you're going to want to redecorate totally.
What's good about being a landlord in France?
That was the bad news. The good news for most landlords is the long rental terms. 36% of the French rent their homes, and that percentage is a lot higher in most of the major cities - up to 60%. Many French families stay in their rented house or flat for ten years or longer. Unless you're renting to students or younger singletons, you may have a single tenant for years, giving you a nil vacancy rate, no need to bother with finding new tenants, and a strong recurring income stream.
You'll also be able to raise the rent annually during the tenancy - as long as the agreement has a clause enabling you to do so (it's worth checking, even if you have a property manager). Leases usually link rent rises to the reference index (IRL) that is published by national economic institute INSEE, so there's no need for you to negotiate, wheedle or threaten - the rent simply increases, pretty much in line with inflation.
And as a landlord, you can ask your tenant to insure the property. You're entitled to see the insurance certificate, so you can be sure that the property is covered.
Another really excellent feature of being a landlord in France - if you're a French resident - is that successive governments have recognised the important place of landlords in making accommodation available. They have, therefore, offered some great tax breaks and subsidies to encourage landlords to invest.
For instance, the Loi Pinel and Loi Denormandie allow landlords who invest in new property (Pinel) or refurbish below-standard older housing (Denormandie) significant tax breaks over a number of years. These are conditional on the property being rented out for a number of years, so they are not short-term incentives, but they can represent a significant saving for most investors. These tax breaks can be set against your other income, for instance from other investments or salary.
Some municipalities also offer targeted grants for refurbishing older properties, particularly where energy efficiency measures are concerned. This can come through ANAH (the national housing agency) and is usually linked to social rentals; in some cases ANAH may even take on responsibility for managing the property.
Remember, though, if you're not a French resident, you'll be responsible for paying tax in France first, and then the income will also be taken into account in your country of residence - which might not have the same tax breaks.
Short-term lets will appeal if you have a holiday house or a city apartment that you don't use all the time. Most short-term lets are for less than a month, and don't give the renter the same rights they'd get under a long term letting.
Different rules apply to renting out your main residence and renting out a secondary home. Renting out your main residence generally doesn't need to be declared, as long as it's for under 120 days. However, some cities, including Paris, Lyon, Lille, Toulouse and Bordeaux, require you to register. You make a simple declaration - it's not an application, and can't be refused - and you'll get your registration number.
However, renting out a secondary home is more tricky, with different administrative requirements depending on where you live.
• In most rural communes you just need to tell the mairie.
• In cities over 200,000 population, and in the departments of Hauts-de-Seine, Seine Saint-Denis and Val-de-Marne, you need to make a declaration and then obtain authorisation for change of use.
• In certain cities (Paris, Bordeaux, Biarritz, Cannes, Lyon, Nice, Strasbourg, Toulouse and a few others) you'll need to get the authorisation first.
So if you have a Limousin farmhouse or a house in Provence, you're not going to have a problem; but renting out a city flat comes with a certain amount of paperwork. Don't be tempted to cut it out - you'll need that registration number if you use AirBNB, anyway, and there's a €50,000 fine for non-compliance.
France is a great place to be a tenant. But equally, it's a great place to be a landlord, if you get things right. However, dealing with the paperwork can be a pain. Fortunately, there are plenty of good rental agents - who by law need to be registered as estate agents and have their certificate displayed on their premises - for whom dealing with paperwork is second nature. It's well worth the 10% or so they'll charge to ensure all the paperasse is under control.