What does scrapping rent controls in Paris mean for tenants?

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What does scrapping rent controls in Paris mean for tenants?
Photo: AFP

The shock decision by a French court to scrap the landmark rent controls implemented in Paris back in August 2015 has left the government and Paris City Hall reeling. But what does it mean for tenants?


Paris City Hall immediately came out against the move, fearing the scrapping of the controls would lead to soaring rent prices. 
But the message from real estate experts is that people renting in Paris shouldn't panic.
Here's what you need to know:
Will rents suddenly skyrocket?
The short answer is least not for most people. 
"There will be no massive increase in rents," Philippe Buyens, manager at property search site CapiFrance told Le Parisien.
The president of France's national union of real estate agents, FNAIM, Jean-Marc Torrollion also advised tenants to remain calm. 
He said that the impact of the scrapping would depend which of the following three categories you fall in to: tenants already living in an apartment, those whose lease is about to be renewed and those looking for housing right now.

Paris fears rent prices will soar after shock ruling to scrap controlsPhoto: AFP

"For the first [category], the rent is contractual. The cancellation of the controls is therefore without effect on the current contract, there is no financial consequence," he said. 
"For tenants who are preparing to change their lease, their next contract will not be subject to rent control. This is the case for all leases signed since Tuesday. 
"But again, do not panic. According to a decree made on August 1, 2012, which is renewed each year, the amount rent payments can be increased is capped in several hundred French cities."
This leaves the final group -- people looking for a new apartment to rent.  
"In this case, the owner can, from one day to the next, decide to increase the price on his advert."
What impact will the scrapping have on the real estate market?
According to experts, owners in Paris have already been switching to renting out their properties on a seasonal basis because it is hard for them to make money on a "classic" rental. 
"While the benefit of rent controls for the tenant is undeniable, it has led owners to switch to renting out properties on a seasonal basis rather than full-time," said Buyens, the manager at CapiFrance. 
Paris rolls out tough new rule on Airbnb rentals
Photo: Joseph Plotz/Wikicommons
That means that there are more properties listed on Airbnb but less housing for professionals, with industry experts saying that for homeowners to return to the "classic" rental, it is necessary to provide them with a number of guarantees, including greater security against unpaid bills and tax incentives. 
They also point out that for "owners who are indebted to pay for a property, it is very expensive in Paris, so there must be a minimum profitability."
The bad news for tenants is that But "prices will not go down," Eric Allouche, director of Era Immobilier told Le Parisien.
"It's about supply and demand! Yes, tenants have to worry in part, in the sense that economic realities are catching up with us." 
"It's an aberration, a sham, to make people believe that everyone can stay in Paris!" he added.



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