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Money Matters and Legal / In Law

French supreme court rules new law regulating rentals partly unconstitutional

Loi ALUR - Paris Property Group

The French Parliament had passed the law the loi ALUR/Duflot but right-wing senators and members of Parliament referred it to the Constitutional Council on the grounds that parts of it might be anti-constitutional.

We reported recently on the government’s flagship piece of legislation on housing and property rentals.

The Council made known its decision on March 20th. It authorized most aspects of the law, judging those to be ‘in the general interest’ but made some amendments. We set out the most relevant issues below.

Short-term rentals

Owners are still required to seek authorization from the City of Paris for a temporary change of usage for rentals of a ‘transient nature’. The practical implications of this will not be clear until the decrees enforcing the law have been issued.

However, the Council has annulled the requirement to seek authorization by a majority vote at a meeting of the co-owners’ association. It judged that this measure restrained the legitimate exercise of owners’ property rights. 

Agent exclusivity

The Council has authorized the requirement for property owners to grant exclusivity to one letting/property agent.

Rent capping on long-term rentals

The Council has approved this. Rents cannot be more than 20% above the median rent set by the Prefect in urban areas where there is high demand for rentals. This does not apply to short term rentals or to furnished properties, provided the latter is not the occupant’s primary residence.

The original law made an exception for a particularly comfortable or well-situated apartment, for which an owner could charge a rent above the cap. However, the Council has introduced an important distinction by removing the word ‘exceptional’. This means effectively that any high quality property could be exempt from rent capping.

Universal rent guarantee

The Council has upheld this measure. Tenants will no longer pay a deposit or provide guarantors. The government will underwrite any non-payment of rent instead.

The bulk of the law, including the measures mentioned above, will not come into effect until the government has issued the decrees clarifying the detail. We will keep you posted.

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