Landlords / Guide
Posted at October 27, 2020

How to calculate the rent in principal residence?

Rent control, Rent estimate?

 

For the last 33 years, Paris Rental has been dedicated to luxury furnished rentals for professionals moving to Paris.
Since the Corona event and the reduced air traffic, our company rebounded by adapting to a new clientele, the "main residence" lessors. Paris Rental's goal is to satisfy both customers wishing to move into a furnished apartment available for rent while and hoping to rent their furnished apartment that has been empty for a few weeks or months. 
To inform you about renting as "principal residence," here is some information on Paris's rent regulation. Before rent regulations, renting one's apartment at market price -with maintenance charges included in the rent- was the usual. However, renting as "main residence" requires the lessor to separate the rent from the rental charges and respect a calculation rule to evaluate this rent.
 

I. What is Rent Control in Paris?

 

First implemented by Alur law, the Rent framework stopped, then was re-enforced with the Elan law, applying to municipalities that wish to do so, and subject to meeting some criteria. These criteria consider the significant differences between private and public landlords and the low rate of new constructions around the town. As a result, since November 25, 2018, municipalities can limit the "re-letting" rent while delimiting an increased reference rent not to be exceeded.
The majority of municipalities that apply the rent framework are located in the Paris region, and among the larger cities, only Paris and Lille have adopted it to date.

Rents are fixed each year before the summer, depending on the type of accommodation (empty or furnished), the number of rooms, and the building's date of construction. They apply to rental contracts signed between July 1 of the current year and June 30 of the following year.
 

II. Which dwellings are affected by the rent control?

 

Rent control concerns housing rented as "principal residence." There are several cases: unfurnished rentals with a classic lease and a three to six-year renewal (individual owner or company), furnished rentals with a tacitly renewable twelve-month lease, rentals with a mobility lease ( one to ten-month non-renewable lease) or student lease (nine months).

 

III. How to calculate the regulated rent?

 

The monthly rent to be applied calculates the "referenced rent" per square meter indicated for the accommodation multiplied by the number of habitable square meters. The calculation only applies to the rent itself, always excluding charges. The amount of rental charges is fixed according to the tenant's rented accommodation expenses. These charges are added to the rent.

Example:

For a furnished apartment of 80m2 composed of three rooms, built between 1946 and 1970, located in the district of Saint-Germain des Prés in Paris 6th, the increased reference rent is € 36.1 / m2. The rent will amount to:
80 m2 x 36.1 = € 2,888

To do a simulation for the apartment you wish to rent, go to the DRIHL website (Management Regional and Interdepartmental Accommodation and Housing) to obtain the exact estimate of the controlled rent. 
If you have doubts about the year of construction of the house, consult:  https://www.bercail.com/ 

 

IV. How to define the rental charges?

 

In addition to the regulated rent, the tenant pays his share of the building charges, more often called rental charges. These charges are either a fixed price or a provision. If the lessor opts for the provision, the charge amount will be revised at the end of each rental year based on the IRL index, just like the rent.
Charges are calculated from the expense accounts transmitted by the trustee after validation of the accounting at the co-owners meeting. Owners receive their account from the trustee at the end of the year, with the tenant's amount recoverable. Make sure to include the lots to be taken into account (e.g., the cellar or the service room if they are rented with the apartment) and divide the amount by twelve to have the monthly amount of the rental charges. 
The statement of accounts from your property manager allows differentiating the rent from the rental charges. 
In furnished rentals, it is possible to apply the flat rate option, which remains fixed.

 

V. What is the exceptional rent supplement?

 

For some apartments, the law allows adding a supplement amount to the controlled rent for additional comfort. As explained in article 140 of the Elan Law, it is possible to calculate an exceptional rent when most other apartments do not have the same qualities. Yet, prime rents are not allowed on first rentals.

The elements taken into account for prime rents may be: 

  • A terrace
  • A view of the great monuments of Paris
  • Luxury furniture and equipment
  • Parking
  • A sauna
  • A home cinema
  • Ceiling height exceeding 3.30m

Find all the details in Legifrance article 140 of the Elan law circular.

 

VI. Sanctions in the event of non-compliance with the rent framework

 

As explained above, rent control happened in 2018. The administrative staff carries out regular checks, and sanctions apply for non-compliance to rent control on the principal residence. Thus, lessors risk fines up to € 5,000 for a natural person and up to € 15,000 for a legal person. 

Credits photo @sctgrhm

 

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