Due to high housing prices, many of those who work in Paris are forced to live in the suburbs
Opponents of the city hall's decision fear that the rental cap will force apartment owners to leave the market and lead to an even greater drop in the supply of apartments. However, as RFI notes, Ian Brossat called the cost cap a 'victory' for the city hall, which will save Parisians 'suffering from excessively high rents.'
In recent years, the cost of renting for low-income categories of citizens in Paris has become virtually prohibitive: over 10 years, the cost of renting housing in the private sector has risen by 50% against a relatively modest level of overall inflation (around 1%). As a result, a small studio in the 13th arrondissement of the capital will cost about 700 euros, while for a two-room apartment you will have to pay more than 1,100 euros.
According to data from the Ministry of Urban and Housing Policy, one in five tenants spends about 40% of their income on rent.
The Paris city hall emphasizes that this is not about imposing social housing prices on the private sector. From July 1, the cost specified in the contract per square meter must not exceed the average for the 'sector' by more than 20% (Paris will be divided into 80 conditional parts). The rent will also depend on the age of the building, the number of rooms, and the presence of furniture.
The maximum rental cost can be found on a special website. For example, the rent for a two-room apartment in the 20th arrondissement of Paris cannot exceed 24 euros per square meter by law, and the maximum cost of a studio near Notre-Dame will be 37 euros per square meter.
The city hall clarified that the introduced restrictions will primarily help those who rent 'tiny' apartments at inflated prices, including students and the unemployed. Now owners of small rooms (10 sq. m.) will be forced to lower the rent: currently their cost can exceed 500 euros.
If a property owner signs or renews a lease with a rent exceeding the maximum, they may be fined up to 15,000 euros.
Opponents of the Paris authorities' initiative are confident that such a step will force owners of capital housing to engage in short-term rentals (which the city hall is also fighting) and reduce the already small supply. The city hall states that the initiative will not have a reverse effect: from 2015 to 2017, a similar mechanism already operated in Paris and limited price growth.