New residential rent controls take effect in Paris

The rental market in Paris is now subject to new rent control regulations covering all new residential leases and those that are up for renewal.

The law seeks to cap rent increases from one lease to the next in the country’s largest cities as part of sweeping housing reforms promised by French President Francois Hollande during his election campaign.

The policy is likely to be popular among tenants in the city who have seen home rents rise by 42% in the last 10 years, although it has been criticised by estate agents and landlords.

Paris is the first city to see the law being enforced and it is likely to be rolled out in Lyon, Bordeaux, Marseille, Lille, Grenoble and other big cities in the coming months.

The law allows the prefecture of each city to establish a maximum rents measured in euros per square meter based on when the listing was built and where it is located. The levels must be no more than 20% above or 30% below the median rental price for the area.

There is likely to be winners and losers. It is estimated that rents on around 60,000 listings are likely to come down and those of 25,000 to go up. The biggest decreases are likely to be for studios and one bedroom apartments, according to agents.

The National Federation of Estate Professionals (FNAIM) said the law will hold back the rental housing market and put off buy to let investors. It is considering legal action and already agents in Lille have blocked the law being implemented by withholding housing and rent data.

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Source: Property News Spain