French cities apply for rent controls to counter skyrocketing prices

French cities apply for rent controls to counter skyrocketing prices
Illustration photo: AFP
Several cities in France want to copy Paris and Lille and introduce rent control measures make housing more affordable.

Bordeaux, Lyon and Montpellier are among dozens of local authorities that have asked the French housing minister for permission to cap rents in their areas, a measure that currently has only been introduced in Paris and the northern city of Lille.

According to French law cities in so-called zones tendues (tense zones) with high demand may introduce rules to control rents, but first they need to ask for permission from the Environment Ministry, to which the housing minister belongs. 

Local authorities have until November 23rd to send in their request for the coming year. Some 30 towns and cities have so far applied, according to Le Parisien, including many in the Paris suburbs, which have seen the effects of rent control in the capital.

These include: Bagnolet, Bobigny, Bondy, Le Pré-Saint-Gervais, Les Lilas, Montreuil, Noisy-le-Sec, Pantin, Romainville, Aubervilliers, La Courneuve, Epinay-sur-Seine, L'Ile-Saint-Denis, Pierrefitte-sur-Seine, Saint-Denis, Saint-Ouen, Stains et Villetaneuse, Arcueil, Cachan, Chevilly-Larue, Choisy-le-Roi, Gentilly, Ivry-sur-Seine, Le Kremlin-Bicêtre, Orly, Villejuif, Villeneuve-Saint-Georges and Vitry-sur-Seine.

Why do they want to do this?

French cities struggle with spiralling housing prices – both for buying and renting – caused by high demand.

Paris is the extreme example where prices have climbed to the extent that renting in the centre has become a luxury many cannot afford. As a result, lower income and middle class Parisians are pushed out of the city and into the suburbs.

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Other cities worry the same is happening in their areas too. 

“The city's centre must remain accessible to all,” said Bruno Bernard, president of Lyon's metropole, which has applied for permission to introduce rent control measures as of 2021.

“We are responding to abuses resulting in outrageous rents, in particular in small surfaces intended for the most precarious groups such as students,” Bernard told local media.

When can they start?

Some of the municipalities that want to impose rent ceilings made the request a while back, but the ministry has said they need to examine each file and then issue a decree that can “fix the perimeter” for another decree that the préfecture must issue annually.

The ministry has not yet concluded when this will happen, but told Le Parisien that is will likely be sometime in 2021.

How does it work?

Often referred to as a plafonnement de loyer (rent ceiling) in French, the term the government uses is encadrement de loyers (rent control), which technically is more accurate seeing as introducing these measures does not really fix a top price that no landlord can exceed, but rather a series of rules all landlords must comply with.

In Paris and Lille, landlords operate under a system where rents cannot exceed a fixed maximum amount of the loyer de référence (reference rent). A house or apartment will have a different loyer de référence depending on its size, what area it is situated in and its year of construction.

Anyone who wants to rent out property in either of these two cities must comply with these demands, even if they in theory could have asked for higher rents thanks to the high demand.

The law also protects the tenant from attempts by the landlords to increase the rent later and outlines what steps the tenant should take if the landlord breaks the rules.

This price simulator shows how it works in Paris, whereas this formula shows how it works in Lille.

Does it really work?

In Paris, the rent ceiling rules are more broken than followed, according to a study published this summer by Meilleurs agents, a French company that specialises in property prices.

Over half (53 percent) of the 5,500 property advertisements included in the study did not comply with the rent control rules, they found. 

Properties situated in expensive neighbourhoods were over-represented as rule breakers. In the central 6th arrondissement as many as 70 percent of the advertisements examined in the study exceeded the legal price.

On average, landlords in the capital charged €130 too much per month, the agency concluded, and those renting out small spaces were the worst. Of the apartments measuring less than 20 square metres in the study, 80 percent were illegal, they said.

However, the same study found that prices in Paris had flattened out since the capital introduced rent the control measures the year before, which pointed to that, even if many broke the rules, the measures had a positive effect overall.

 


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