Renting an apartment in Paris is quite expensive – many do not comply with the law on rent control
As RFI writes, the system designed to limit excessive rent increases for apartments was established in France by a special law in August 2015. The high cost of rental apartments and constant increases in real estate prices have long been a problem in Paris and other major French cities. The Ministry of Urban and Housing Policy notes that one in five tenants in the private sector spends 40% of their income on rent!
The new law introduced the concept of a standard average rent for urban agglomerations where the housing problem is particularly acute. The rent control system has been operating in Paris for a year now, and over time its effect should extend to all major cities.
The essence of the system is quite simple. The prefecture, by its order, establishes the standard average (more precisely, median) rents for different types of housing. The calculation takes into account the area of the dwelling, number of rooms, year of construction, whether it is furnished or unfurnished, as well as location (Paris is divided into 14 zones that encompass 80 neighborhoods).
Under the new law, when renting an apartment, the rent must not exceed the average value by more than 20%. It also must not be lower than the "standard" by more than 30%. This is not about imposing "state" prices on the private real estate market. Based on complete market price statistics, the authorities calculate the average rent for each type of housing in each Paris district. The new law establishes a kind of "price corridor" for apartment and room owners. The price "standards" are recalculated annually based on fresh market statistics.
The consumer protection association CLCV (Consommation, logement et cadre de vie) marked the anniversary of the law on October 25 with a special study that revealed major problems with compliance with mandatory standards. The study showed that the law is not followed in almost 40% of cases, and one in two landlords renting out housing without intermediaries significantly overstates the rent.
The CLCV association examined 800 rental apartment listings posted on the main classified websites pap.fr, leboncoin.fr, seloger.com, as well as at the largest real estate agencies Century21, Orpi, Foncia and Nexity. The analysis showed that 62% of rental listings comply with the law's norms (slightly more than a year ago – 58%). In 38% of cases, rents exceed the standards.
The CLCV association found that the rules are most often violated by apartment owners who rent them out directly, without using intermediary agencies. Half (51%) of such "private owners" do not comply with the law. And 75% of listings placed through agencies comply with the law.
Lawyer of the CLCV association David Rodriguez told Francetvinfo in an interview about which housing is most often rented at inflated prices in Paris: "This is a conscious unwillingness to follow the rules. 38% of rental apartment listings do not comply with these norms. We analyzed 800 listings and also divided them into two groups – those rented directly by the apartment owner and those rented through real estate agencies. We saw that 75% of agency listings comply with the norms. They follow the law that protects the tenant. As for private owners who rent out apartments themselves, half do not comply with the law. This mainly concerns studios and small housing. Our study shows a conscious desire – for some categories of housing – to set a price that far exceeds the permitted maximum. The owner sets the price they think they should get."
By violating the law and renting Paris apartments at prices exceeding the permitted amount, owners receive an average "illegal" profit of nearly 1400 euros per year, notes the consumer protection association CLCV.
"On average, we found an excess of rents by 17%," says David Rodriguez. "This means that on average the monthly rent is inflated by 115 euros. For small studios, this is a lot. The amount of excess increases with the size: 17% of a 500-euro rent is not the same as 17% of an 800-900-euro rent. In large apartments, the excess can reach 200-300 euros. We have also seen cases of exceeding the maximum permitted rent by 400 euros."
Experts recorded the most price abuses in the segment of the least comfortable housing. In most cases, owners inflate rents for one-room studio apartments or the famous Parisian chambres de bonne. These small rooms of 9-12 square meters are often located in attics, often with a shared toilet and shower room "on the floor."
"A typical example is small furnished chambres de bonne. This housing, as we established a year ago, has the highest excess over the permitted maximum. And this is doubly worrying because such housing is intended mainly for young people, for students, i.e., people with low incomes. Their already difficult situation is further complicated by exorbitantly high rents," says David Rodriguez.
The consumer protection association CLCV notes that 46% of studio apartments in Paris are rented at inflated prices. When renting, for example, 4-room apartments, excess was recorded only in 12% of cases. In the 10th arrondissement of Paris, a two-room apartment of 41 square meters unfurnished rents, for example, for 950 euros per month – almost 250 euros less than the legally permitted maximum.
The CLCV association notes that in the year since the new rules regulating rent increases came into effect, the situation is improving – slowly but surely. A year ago, 58% of Paris rental ads complied with the law, now it's 4% more. The number of law-abiding owners renting out apartments without intermediaries has grown from 47% to 51%.
Consumer rights advocates have demanded punishment for dishonest apartment owners who inflate rent. Currently, the law does not provide for any fines for violators of pricing rules. A tenant can either challenge the inflated rent in court or simply not sign the lease agreement.
Minister of Urban and Housing Policy Emmanuelle Cosse stated that inspections will be carried out in Paris to ensure compliance with the new law. A special department of the Ministry of Economy and Finance for competition and consumer affairs will handle inflated prices. The inspectors will primarily target real estate agencies that violate pricing rules. Some large agencies have already promised to 'normalize' their rental listings in the near future.
Lawyer David Rodriguez warns: the new rules will not lead to a reduction in the cost of renting Parisian housing. The purpose of the law is different. 'The task of the system that sets a maximum ceiling on market rental prices is to avoid a sharp rise in prices,' he says. 'By limiting their growth, over time we will arrive at average prices that will fluctuate within a certain corridor, like European currency exchange rates before the introduction of the euro, between upper, lower and median values.'
Following Paris, the new rent control system is also set to come into effect in the northern city of Lille by the end of the year. By 2018, it is planned to be launched throughout the Paris region. Average rent standards will be established in 411 communes of the metropolitan area, home to 8 million people.
The authorities remind that it is impossible to introduce the new rental market regulation rules immediately and everywhere. Each city must first conduct extensive statistical work to collect data on rent amounts. Only on the basis of such statistics can average standard norms be established. In Paris, where such statistics had been collected in advance, the new system came into effect first.