New legislation recognizes that demand for units has spun out of control, as have the fees and price hikes rental agencies charge.
Finding an apartment to rent in France is about to get cheaper. A whole lot cheaper, in fact. This week, the French government announced details of a tough new law that will cap the finder's-fee that real estate agents are allowed to charge their rental clients. It’s just one strand of a new set of legislation that is fast turning France into one of the most renter-friendly countries in the world.
Beginning on September 15 next year, the cap’s limits will depend on the region. In Paris proper and its surrounding départements —dubbed the zone très tendue or “very strained zone” due to its high rents and high demand—agents will be allowed to charge no more that €12 (about $16 U.S. dollars) per habitable square meter. In 28 other urban areas categorized as merely “strained”—including the cities of Bordeaux, Lyon, Toulouse, Marseille, Lille, and Strasbourg—the cap will be at €10 (about $13 U.S. dollars) per square meter. For the rest of France, an €8 (about $11 U.S. dollars) cap will be put in place. Meanwhile, agents will be allowed to charge no more than €15 (about $20 U.S. dollars) total for providing an apartment inventory in Paris, stepping down to €13 (about $18 U.S. dollars) and €11 (about $15 U.S. dollars) in the other two zones.
If they charge the legal maximum, real estate fees would still be substantial. A modestly sized 35-square-meter (377-square-foot) apartment in Paris would still set you back just over $560 in fees, a very high rate compared to London, where last year the average rental-agency fee was $370. For France, though, the drop in costs is still pretty radical: In Paris, it will mean fees will fall by nearly half.
The change is badly needed. Real estate agents are rarely a much-loved breed anywhere, perhaps unfairly given the necessity of their service, but in Paris they have a particularly bad reputation. They charge a lot of commission for securing an apartment: As in New York, this can easily be up to a month’s rent. What’s more, until recent law changes, they also charged renters for access to lists of potential apartments, even though these lists are notorious for being peppered with properties that have already been rented. The levels of proof of income and savings required by agents can be hard enough for French renters to manage. For foreigners unversed in French bureaucracy, they are Kafkaesque.
France’s legislators can hardly be accused of taking all this lying down. Since Francois Hollande came to power, they have gone on a sort of pro-renter rampage. Gathered together as part of the Loi ALUR (an acronym standing for “Accès au logement et urbanisme rénové”), the new rules will see France’s “very strained” zones getting some pretty tight rent caps. When the law takes effect, no apartment's rent will be allowed to rise more than 20 percent above an officially designated neighborhood median per square meter. A state agency will also help landlords with tenants who don’t pay their rent. This agency will pay the missing back rent upfront, then chase the unpaying tenants itself. This will make it less risky for landlords to rent to lower-income tenants, who have a higher chance of default. In Paris, official pressure to release more affordable apartments onto the market has gone yet further. As CityLab reported back in July, the city now intends to fine landlords who leave office buildings untenanted too long, to encourage them to convert them into dwellings.
French landlord groups and agencies are in shock, as you might expect. With fees set to drop, it’s possible some agencies may close or be forced to downsize. But in resetting a market that has frequently seen renters tearing their hair out with frustration, the new law may end up not just curbing agencies. It could also help restore trust between them and their clients.