Feargus O'Sullivan is a contributing writer to CityLab, covering Europe. His writing focuses on housing, gentrification and social change, infrastructure, urban policy, and national cultures. He has previously contributed to The Guardian, The Times, The Financial Times, and Next City, among other publications.
Roughly a year after strict new rent control laws took effect, 30 percent of residential leases have come down in price.
Rent control laws in the city of Paris are doing exactly what they were designed to do. That’s what France’s Minister for Housing, Emmanuelle Cosse, has been saying in recent celebratory interviews to the French media. It’s been roughly a year since France put in place strict restrictions on rent rises in Paris and other “strained zones” across the country. And while it’s Cosse’s job to defend legislation introduced by her government, there is indeed evidence in the past year’s figures to back up the assertion that the law changes are doing their job.
According to figures released by Paris’s Rent Observatory this week, 30 percent of the city’s new residential rental contracts signed over the past year have come in lower than the previous contract for the same properties. For Parisian renters in search of a better deal, that’s certainly good news. Critics of the new law are nonetheless complaining that the drop in monthly rents for new residential leases is uneven and comes with other unwelcome side effects.
France’s current rent law, which went into effect about a year ago and is referred to locally as the Loi Alur (and sometimes the Loi Duflot after the minister who oversaw it) works as follows: In zones of high demand—a.k.a. the cities of Paris, Marseille, Lyon, Montpellier, Ajaccio and Arcachon—all rental contracts are overseen by an official observatory. This observatory estimates and fixes a median rent per square meter for a given area, separating the district’s real estate into price bands based on whether it’s furnished and the number of rooms. No future rental contract is allowed to charge more than 20 percent more than the fixed median rent for the apartment’s price band. This not only (in theory) prevents galloping rent rises, it also provides prospective tenants with a clear marker of how much landlords have the right to charge.
That’s how it is supposed to work, at least. In practice, reports from real estate agents (who opposed the law) suggest that landlords are still getting away with charging too much in some areas. This is because it’s up to tenants to complain, and in certain areas many of them are prepared to pay extra to get the right apartment. Still, even amid reports of overcharging, the overall proportion of overpriced apartments is falling, so the law is clearly having some effect even if informing tenants of their rights has remained an issue.
It’s an issue that a Parisian website launched last week may well help to address. The Encadrement des Loyers website lets both tenants and landlords type in an apartment’s size and location and find out if the rent being asked for a new contract is too high or not. Follow the simple seven-step questionnaire and you leave armed with an accurate assessment of whether or not a residential lease conforms to the new law. This won’t stop tenants who choose to overlook the rental observatory rules to get the right apartment, of course. But the hope is that it will cut the number of tenants accepting rents that are too high simply because they’re uninformed.
Frustrated landlords have nonetheless pointed out some ongoing inconsistencies with the law. France’s National Real Estate Federation has claimed that the criteria offered by the law for judging apartments’ proper rent are too limited. As newspaper Économie Matin noted last month:
“Be aware that only four criteria are used to fix the basic rent (location, building age, number of rooms and being furnished/unfurnished). It’s not the condition of the housing. The basic rent [allowed] is the same if the accommodation is newly refurbished or with shabby paint and dilapidated bathrooms. Similarly, the rent for a 6th floor apartment will be identical with or without an elevator.”
This sounds cumbersome, but suggests problems with fine tuning the regulations rather than with the concept of the law itself. Meanwhile warnings from pro-landlord groups that some owners would simply withdraw their properties from being rented out to avoid the new laws do not seem to have come true. But could it be the case that poor economic performance, rather than legislation, is behind the reduced asking price for many new rental contracts?
Probably not. France and Paris’s recent economic performance is not amazing; the city has suffered from a tourism downturn since last November’s terrorist attacks. Despite this, France’s economy has actually seen modest growth recently and Paris’s economic outlook seems relatively stable, with a growing population meaning demand for housing remains constant. The city’s rental laws may be a blunt instrument when it comes to differentiating between some types of housing, but it an instrument whose effect is nonetheless being felt.