The rent cap was put before the Council of Ministers by Economy Minister Bruno Le Maire on Thursday as part of the proposed purchasing power bill that will be debated in the National Assembly in the coming days.
The government is also proposing measures like extending the freeze on gas and electricity bills, a fuel rebate and one-off grants to low income households, all designed to stave off the inflation crisis which is gripping Europe in the aftermath of Russia’s invasion of Ukraine.
Le Maire had previously confirmed the plan to limit rent rises by limiting the Indice de référence des loyers (rent reference index), the scale on which rent increases are calibrated.
Rent hikes are already strictly controlled in France, but the government’s plan will ensure that landlords can only impose small rises this year, as householders struggle with rising prices for everyday items.
Le Maire says that without the government’s ‘rent shield’, landlords across the country would increase rents for their tenants by “five to six percent”.
The plan has the backing of France’s national housing body the Conseil national de l’habitat.
Rules on rent charges in France are strict.
A landlord can only increase rent once a year if the lease agreement provides for it in a review clause.
The initial rent charge must run for at least 12 months before any increase, and further increases can only occur 12 months later.
Rent increases may not be backdated – so if, for example, the lease revision date is March 13, 2021, but the landlord does not raise rent charges until July 13, 2021, only rents collected from this date can be increased.
If the lease review date is March 13, 2021, a landlord can increase the lease from that base point until March 12, 2022.
If the agreement does not include a review clause, the rental amount must remain the same for the term of the lease, unless the landlord has made improvements to the property at their own expense.
Even when a landlord can increase the rent on a property, they can only do so with reference to the rent reference index, which sets a ceiling for the annual rent increases that landlords can demand. The rules and the method of calculation are described here.