Expert Guide to the Landlord Responsibilities in France

Section 1: Legal Framework and Compliance

1.1 Regulatory Overview

• • Professional vs. Non-Professional Landlord

• • Micro-entrepreneur status for Landlords

1.2 Rent Market

• • Rental Index

• • Rents Frozen

• • Maximum Rents

• • Poorly Insulated Dwellings

• • Affordable Rentals

• • Rent level

1.3 Clauses

• • Obligatory clauses

• • Clauses forbidden by law

• • Duration of a tenancy

• • Controls on Adverts

• • The landlord’s rights

1.4 Registration and Licenses

• • Business Registration

• • Para-hôtelier

• • Local Council Registration/Authorisation

• • Business Registration Number (SIRET Number)

• • Rules for Social Security Contributions

• • Exemptions and Specific Cases

Section 2: Safety and Health Regulations

• • Obligatory Statutory Surveys for a French Rental Property

• • An incoming inventory

• • The Mandatory Surveys

Section 3: Financial Obligations

3.1 Taxes and Fees

• • Tax Advantages

• • Income Tax

• • VAT and Special Tax Regimes

• • Micro-Enterprise

• • Tax Liability Calculation

• • Régime Réel

• • Deductible Costs

• • Strategic Implications

• • Micro-Foncier

• • Taxation of Lodgings Income

• • Reporting and Taxation

3.2 Insurance Requirements

• • Protection against Non-payment of Rent

• • Rental/Damage Deposit

• • Insurance Policy

• • Use of a Guarantor

• • House Insurance on a French Rental Property

Section 4: Tenant Management

• • Tenancy Agreements

• • Rental contract

Section 5: Maintenance and Repairs

• • Minimum Condition Standards

• • Major Building Works

Section 6: Ending Tenancies

• • Eviction

• • Procedures for a landlord termination of a lease contract

• • Property Condition Report – L’Etat des Lieux

• • Who Prepares the Report?

• • End of Tenancy

• • Why It’s Non-Negotiable

Section 7: Dealing with Disputes

7.1 Mediation and Arbitration

• • Options for resolving disputes without court intervention

7.2 Legal Recourse

Section 8: Resources for Landlords

• • Government and industry bodies that provide information and support

Appendices

 

France has very tight rules on property rentals. And those rules are also quite complicated, so you need to know what they are and how they apply to you.

Section 1: Legal Framework and Compliance

1.1 Regulatory Overview of French rental laws

Becoming a landlord involves far more work than many people realize. Before you can welcome tenants, you must fulfill various legal requirements for your protection and that of your tenants.

Professional vs. Non-Professional Landlord

The distinction between professional and non-professional landlords in France is primarily based on how they let their property, with specific implications for business registration and taxation.

Professional Landlord (Loueur en meublé professionnel):

A landlord becomes classified as a professional if their annual receipts from furnished accommodation exceed €23,000, constituting more than 50% of the household’s total income.

The landlord must also register their business for tax purposes, obtaining a SIRET number through an administrative registration.

Professional landlords who rent out property as a business must pay various social security contributions due to their rental activities. However, they also benefit from several tax incentives designed to make property investment more attractive.

These advantages include:

1. • If a landlord incurs losses from their rental properties, such as through maintenance costs or periods of vacancy, these losses can be deducted from their overall taxable income, potentially lowering their tax liability.

• • In some jurisdictions, wealth tax is imposed on individuals holding assets above a specific value. Rental properties owned by professional landlords may be exempt from this tax, representing a significant saving.

• • When professional landlords decide to sell a property, they could be eligible for lower rates on capital gains tax. Capital gains tax is charged on the profit made from selling the property, and the rate can be reduced based on the duration the property was held, among other considerations. This incentivizes long-term property investment and stabilizes the rental market.

• • Furthermore, those who inherit rental properties may enjoy benefits such as reduced taxes in certain situations. This reduction can make it more financially manageable for heirs to retain and manage these properties, encouraging the continuation of property ownership within families.

These fiscal policies are meant to encourage investment in the housing market, stimulate rental property availability, and support the business of professional landlords.

Non-Professional Landlord (Loueur en meublé non professionnel):

Those who let furnished accommodation but do not meet the above criteria for professional landlords fall into this category. They can still register as a business, especially if they offer additional services to guests, which would classify them as offering ‘para-hôtelier’ services.

Obtaining a SIRET number is essential for tax purposes, even for those not classified as professional landlords.

Micro-entrepreneur status for Landlords

Although the classification as a professional landlord usually doesn’t permit one to attain micro-entrepreneur status for gite (vacation rental) accommodations with annual receipts under €23,000, many landlords register as micro-entrepreneurs by offering extra services.

These services can include but are not limited to, meals, cleaning, or guided tours, differentiating their offering from mere property rental. This allows them to benefit from the simplified tax regime and lower social charges associated with micro-entrepreneurship.

Strictly speaking, adopting ‘micro-entrepreneur’ status as a non-professional landlord for gite accommodations under €23,000 is not straightforward.

However, landlords have successfully registered for such lettings by offering guests additional services, shifting their status towards that of a ‘para-hôtelier.’ This status change allows for adopting micro-entrepreneur status under certain conditions, facilitating a simpler tax regime and social contributions based on a percentage of turnover.

1.2 Rent Market

To get an idea of the market rent in your area, consult the government website Carte des Loyers, which provides the average rental for properties in your commune.

Another source of information you can use is the Observatoires des loyers, which provides more detailed information for 50 towns and cities in France. Again, this is run by the government.

However, given the diversity in property types and localities, these figures should serve more as a guide than an absolute metric.

Rental Index

A landlord can increase the rental once a year, provided the tenancy agreement has a clause. If it does not, no rental increase is permitted. However, the rent increase cannot be any higher than the previous letting, adjusted by the inflationary increase in the rental index – the Indice de Référence des Loyers (IRL).

Note:

The bouclier layer or “rent shield” is introduced in response to inflation. This is a temporary cap on rent increases, setting them at a maximum of 3.5% until March 2024. This measure overrides the standard IRL (Indice de Référence des Loyers) framework, which is typically used to adjust rent prices based on inflation.

Rents Frozen

In France, rent caps require that new tenancies do not surpass the previous.

In areas of housing stress or high-pressure housing zones, there has been a cap on the maximum rent that can be charged, called l’encadrement des loyers.

This means the rent cannot exceed the previous tenant’s rent on a new tenancy.

The rules apply only if the local council applies them but are pretty universal.

These areas are:

Ajaccio, Annecy, Arles, Bastia, Bayonne, Beauvais, Bordeaux, Draguignan, Fréjus, Genève-Annemasse, Grenoble, La Rochelle, La Teste de Buch-Arcachon, Lille, Lyon, Marseille-Aix-en-Provence, Menton-Monaco, Meaux, Montpellier, Nantes, Nice, Paris, Saint-Nazaire, Sète, Strasbourg, Thonon-les-Bains, Toulon et Toulouse.

From 1st Jan 2024, this list will be substantially extended by over 2,000 additional communes.

Maximum Rents

In Paris and selected cities, rental regulations impose a strict ceiling on rent increases, linking them to the IRL (Indice de Référence des Loyers) but with a fixed upper limit to prevent excessive rises.

The list of places concerned by this rule are Paris, Lille, Hellemmes, Lomme, Aubervilliers, La Courneuve, Épinay-sur-Seine, L’Île-Saint-Denis, Pierrefitte-sur-Seine, Saint-Denis, Saint-Ouen-sur-Seine, Stains, Villetaneuse., Lyon, Villeurbanne, Bagnolet, Bobigny, Bondy, Le Pré Saint-Gervais, Les Lilas, Montreuil, Noisy-le-Sec, Pantin, Romainville, Montpellier, and Bordeaux.

Marseille will be added at the end of 2023; in 2025, there will be 24 communes in the Communauté Pays Basque . 

In Paris, rent levels are set district by district, size by size, and by age of construction. Information on the maximum rental levels in Paris can be found at Loyers de Reference.

Poorly Insulated Dwellings

A landlord is not permitted to increase the rent on a new tenancy (or renewal) if the thermal insulation value of the property is more significant than 331 kWh per square meter per year, i.e., an F or G-class dwelling.

This law has applied nationally.

Affordable Rentals

It is possible to let property at a rental rate below the market rate and obtain tax relief. The scheme is called ‘Louer abordable’.

Under the scheme, a landlord can obtain tax relief of 15% if they accept to let 15% below the market rate or 35% if they let at 30% below the market rate.

You need to sign up with the housing agency ANAH for at least six years to benefit from this.

Rent level

Generally, the rent level for a new tenancy can be freely determined between a prospective tenant and the landlord. Since January 2021, in 28 urban areas with high demand for housing, landlords cannot raise the rent for a new lease or renewal if the property’s energy efficiency is worse than 331 kWh per square meter per year. This applies to properties rated as class ‘F’ or ‘G’ based on thermal insulation performance.

This law applies nationally.

Those areas are:

Ajaccio, Annecy, Arles, Bastia, Bayonne, Beauvais, Bordeaux, Draguignan, Fréjus, Genève-Annemasse, Grenoble, La Rochelle, La Teste-de-Buch-Arcachon, Lille, Lyon, Marseille-Aix-en-Provence, Meaux, Menton-Monaco, Montpellier, Nantes, Nice, Paris, Saint-Nazaire, Sète, Strasbourg, Thonon-les-Bains, Toulon, Toulouse.

Also, starting January 1st, 2023, properties that use more than 450 kWh per square meter per year cannot be rented out. Beginning January 1st, 2025, this rule will also apply to properties rated ‘G’ (using 420 kWh/m^2/year). Properties rated ‘F’ will be included starting January 1st, 2028, and those rated ‘E’ will follow beginning January 1st, 2034.

The landlord is not permitted:

• • To apply a rent higher than that of the previous tenant when establishing a new lease;

• • Carry out the annual review (set of the indexation clause) of the rent during the lease;

• • If the landlord agrees to perform some work to improve a letting and a specific clause in the agreement allows it, then the rent can be increased accordingly.

• • Suggest a rent raise for the tenant upon lease renewal if the rent is too low.

1.3 Clauses

Obligatory clauses

Specific clauses are obligatory to include within a tenancy agreement.

The agreement must also state the tenant’s name and property details, as well as the commencement date of the tenancy, the duration of the tenancy, the type of use of the property, the amount of the rent, the amount of the rental deposit, and the size of the property (for unfurnished lettings only).

Clauses forbidden by law

A surprising number of clauses are forbidden by law, including obligatory payment of the rent by standing order or directly from their salary and any obligation to take out an insurance policy proposed by the landlord.

It is also illegal for a landlord to refuse to accept domestic pets on the property, whether for an annual tenancy or holiday accommodation.

It’s good to know that it’s not legal for a landlord to ask prospective tenants to provide some documents, including demanding a bank statement. The complete list of documents a landlord can request is set out in law.

Duration of a tenancy

The minimum duration of a tenancy is similarly regulated by law. In the case of unfurnished lettings, it is three years; for furnished properties, it is one year. However, since 2019, it has been possible under certain circumstances to enter into a ‘mobility tenancy’ for less than one year.

An unfurnished agreement is possible for only one year, but only if specified in advance and only for professional or employment-related reasons.

Controls on Adverts

Advertisements for properties to rent in housing stress areas must state:

1. • The amount of the monthly base rent (loyer de base);

• • The total of the increased reference rent (loyer de référence majoré): the maximum rent authorized by the rent control program. Increased reference rent is a set limit authorities establish to prevent excessive rent charges, aiming to keep housing affordable while allowing for reasonable rent adjustments.

• • The quantity of any rent supplement (complément de loyer): an additional rent that landlords can charge on top of the base rent.

This supplement can be added for properties that offer special features or benefits due to their comfort or location that justify a higher price.

If specific criteria are met, this extra charge allows landlords to increase the overall rent beyond the capped “increased reference rent.”

The extra charge, or rent supplement, is applicable only in areas subject to rent control regulations, referred to as zone soumise à encadrement des loyers.

• • The font size of the amount of the monthly base rent must be larger than the increased reference rent and the potential rent supplement.

The landlord rights

• • Landlords are granted the right to enter the accommodation for repairs, contingent upon receiving the tenant’s consent.

• • To collect rent, landlords have the authority to access the property, provided they have the tenant’s consent.

• • Tenants bear the responsibility to conduct routine repairs as per the landlord’s rights.

• • Structural work may be undertaken by the tenant, but only after obtaining the landlord’s approval.

1.4 Registration and Licenses

Business Registration

The detailed rules and procedures outlined for landlords in France, especially for non-residents, highlight the complexity of tax and legal considerations in the letting business. Understanding these guidelines is crucial for anyone looking to let furnished accommodation in France, ensuring compliance and maximizing potential tax advantages.

Whether a landlord is considered professional or non-professional, obtaining a Siret number by declaring their activity to the commercial court (Greffe du Tribunal de Commerce) is necessary for tax purposes. This process is essential for administrative and taxation requirements.

The definition of a “Landlord of Furnished Accommodation” in France is specifically outlined to differentiate between basic property rental and more service-oriented accommodations, which could change the tax and regulatory requirements for the landlord.

A landlord of furnished accommodation refers to someone who rents out furnished properties. This classification is pivotal for tax purposes because it distinguishes landlords based on the level of services provided with the accommodation.

The tax authorities require that only a minimum level of services must be offered to qualify as a furnished accommodation landlord.

Para-hôtelier

To further classify and possibly shift the status towards that of a business operating hotel-like services (para-hôtelier), the landlord must offer at least three of the following services:

1. Offering breakfast to guests implies a hospitality service beyond basic accommodation.

2. Providing cleaning services for the property more frequently than during guest changeovers.

3. Supplying guests with linens, such as sheets, towels, etc., which may be changed out regularly.

4. This involves greeting guests upon arrival, which could be done by someone other than the owner.

However, if these services are provided on a marginal basis to the main letting activity, the owner retains the status of a landlord of furnished accommodation. For example, if cleaning only occurs at guest turnover, linen change is not regular, or welcoming is limited to key handover, the status does not shift to that of a para-hôtelier.

This definition is crucial for understanding the tax implications and regulatory requirements for landlords in France. It distinguishes between simple rental activity and those offering additional services that could be considered running a hospitality business.

Local Council Registration/Authorisation

Local Council Registration/Authorisation refers to the specific regulatory requirements that landlords must comply with when offering furnished tourist accommodations on a short-term basis. This regulatory framework aims to manage and monitor the short-term rental market, ensuring compliance with local housing policies, safety standards, and tax obligations.

Landlords of “meublés de tourisme” must register with their local council. This process typically involves declaring the property as a short-term rental accommodation, providing details about the property, and obtaining a registration number. This step is crucial for legal operation and may be required for tax purposes. You can do so at Déclarer un hébergement de tourisme.

Platforms like Airbnb and other short-term rental services are often bound by reporting procedures to local authorities. These procedures help municipalities monitor and regulate the short-term rental market.

The Local Council Registration/Authorisation requirement is crucial for operating “meublés de tourisme” in France. Landlords should consult their local council for specific requirements applicable to their situation, as regulations can vary significantly across different municipalities.

Business Registration Number (SIRET Number)

A business registration number, commonly called a SIRET number in France, is a unique identifier assigned to each business entity. This 14-digit number is crucial for all businesses, including landlords of furnished accommodations, as it formalizes the business’s existence under French law and is used in all administrative dealings, especially for tax purposes.

Whether a landlord operates as a professional or non-professional, obtaining a SIRET number is necessary. This involves declaring their rental activity to the relevant authorities, typically the local commercial court or the business formalities center.

SIRET registration: https://www.frenchtaxonline.com/tax-return/registration-of-a-siret-number-lmnp/

Rules for Social Security Contributions

Becoming a professional landlord implies entering a broader spectrum of business activities, including social security contributions. These mandatory contributions cover health, retirement, and other social benefits.

For landlords, social security contributions are based on their rental income.

Exemptions and Specific Cases:

Generally, non-professional landlords have limited social security obligations, but this can change if they opt for a business status, like the micro-entrepreneur regime, which simplifies tax and social contribution payments.

Professional landlords are subject to social security contributions like other business owners.

If operating a chambre d’hôte (bed and breakfast) is the leading professional activity, and net profit exceeds €6,027 per annum, owners must also pay social security contributions.

You can read more at Permits for Letting Furnished Property in France.

Section 2: Safety and Health Regulations

Obligatory Statutory Surveys for a French Rental Property

The landlord must give a prospective tenant several documents. For example, a technical diagnosis report includes energy performance, lead exposure risk report, and natural, technological, and mining risks report.

An incoming inventory

1. List of equipment for access to information and communication technologies (cable, TNT, fiber, etc.).
2. If it is a co-owned property, a copy of the regulations.
3. An internal electricity installation report.
4. An internal gas installation report.
5. A notice informing you of your rights and obligations.

Several survey reports are obligatory for less than four months of lettings other than seasonal holiday properties.

These survey reports are collectively known as the dossier de diagnostic technique immobilizer.

A fuller consideration of all these reports can be seen in Statutory Property Surveys.

Three reports at minimum are required, but not in all cases.

The Mandatory Surveys

1. Lead Testing (Constat de Risque d’Exposition au Plomb – CREP): Lead testing is necessary if your property predates 1949. This isn’t just a formality; it’s about preventing lead poisoning. The test uncovers any presence of lead in paints, and if found, you’ll need to act.

Remember, this certificate is valid for a whole year if lead is detected and indefinitely if it’s not.

2. Energy Efficiency (Diagnostic de performance énergétique—DPE): Ever wonder how energy-efficient your property is? The DPE answers this by rating your property from A (super efficient) to G (energy-consuming). This informs tenants about potential energy bills and encourages energy conservation.

This certificate is valid for ten years.

You can also contact your local.

3. Asbestos Check (Amiante): Properties granted a building permit before July 1997 need to be checked for asbestos. If asbestos is found, don’t panic!

You’re not always required to remove it, but monitoring its condition becomes your task. This certificate lasts indefinitely unless renovation work is undertaken.

4. Electrical and Gas Safety Inspections: For properties with electrical or gas installations over 15 years old, these checks are crucial to ensure tenant safety. Valid for six years, these inspections look out for any potential hazards that need fixing.

5. Natural Risks Disclosure (ERNMT): The report must stipulate, for instance, whether the property is located in a flood zone, an area prone to earthquakes, major storms, or avalanches, subject to ground movement, near a dangerous factory, or in proximity to significant lorry routes where hazardous materials are being transported.

 6. It may also include information on noise if the property is within a zone de bruit where an airport is nearby. 

7. Sewage System Evaluation: If your property isn’t connected to the public sewage system, you’ll need this check to ensure your private system complies with health and environmental standards.

8. Surface Area

Under a law, all unfurnished lettings must state the habitable surface area of the property.

9. Television Reception

The tenant must be notified in writing whether the property has an offre télévisuelle. That is to say, whether the property is capable of television reception.

These surveys protect both landlords and tenants. They’re not just about ticking off boxes; they’re about ensuring your property is safe, energy-efficient, and compliant with French regulations.

Section 3: Financial Obligations

3.1 Taxes and Fees

France has two local property taxes – the taxe d’habitation and the taxe foncière.

The taxe d’habitation is the residence tax payable by the tenant; the property ownership tax, the taxe foncière is paid by the landlord.

Tax Advantages

Professional landlords enjoy several tax benefits, including:

• • They can offset losses against their total income, not just from furnished rentals.

• • The rental property is exempt from wealth tax.

• • There are concessions on capital gains tax, with complete exemption possible after running the business for at least five years.

• • The property is assessed as a business asset, potentially offering concessions on inheritance tax.

Income Tax

Landlords have three income tax regimes to choose from for profits from furnished accommodation: micro-enterprise, régime réel, and micro-fiscal for those registered as micro-entrepreneurs.

Note: Rental income from letting a furnished room in your house is tax-exempt under certain conditions.

VAT and Special Tax Regimes

VAT will only need to be charged when at least three of the following services are provided to the tenant: breakfast, daily cleaning, reception service, and linen service.

Micro-Enterprise

In France, Micro-Entreprise is a simplified tax status designed for small businesses, including individual entrepreneurs and landlords. This regime simplifies declaring and paying taxes on income from various sources, including rental income.

Unlike other business forms, a Microenterprise does not need to go through formal business registration processes. This simplicity makes it an attractive option for individuals earning income from rentals without the complexities of setting up a full-fledged business entity.

The micro status offers attractive tax allowances for those considering furnished lettings, including gites and chambres d’hôtes. However, demand fluctuates, so assessing your strategy for the best outcome is critical.

As a small landlord, you’re typically not required to register your business, especially when dealing with unfurnished properties. But, for those venturing into the vibrant market of short-term holiday lets, be prepared to tackle some essential registration duties.

Tax Liability Calculation

The tax is not calculated on the total annual turnover (gross income from rentals). Instead, landlords receive a fixed percentage allowance that reduces the taxable base. This allowance covers assumed expenses, so landlords don’t need to itemize or justify actual expenses.

Note: Significant changes were made in December 2023, affecting allowances and turnover limits for classified and unclassified properties.

Régime Réel

The Régime Réel is particularly advantageous for landlords whose expenses exceed the fixed percentage allowances provided under the Micro-Entreprise regime.

This approach can be more favorable for landlords with high operating costs, allowing them to reduce taxable income more effectively than through fixed allowances:

• • Optimal for landlords whose eligible costs are over 30% of gross rental income or those earning more than €15,000 per year from rental income.

• • Allows for deducting a rental deficit from overall taxable income up to €10,700 a year, with specifics on handling loan interest.

Deductible Costs

The Régime Réel permits the deduction of a wide range of actual expenses. These expenses include, but are not limited to:

• • Costs related to the administration and operation of rental properties, such as property management services.

• • Costs for insurance policies covering the property, including liability insurance, property damage, etc.

• • Any taxes levied by local governments directly related to the rental property, such as property taxes.

• • Interest payments on mortgages or loans taken out for the property’s acquisition, repair, or improvement, which does not include repayment of the loan principal.

Strategic Implications

Choosing between the Micro-Entreprise and the Régime Réel depends on individual circumstances, including expenses relative to rental income. The Régime Réel, while requiring more meticulous record-keeping and accounting, can offer significant tax advantages for landlords with substantial-deductible costs, empowering them to make informed decisions. However, the amount of work required for this tax regime should not be underestimated. It should only be chosen by landlords who have an accountant or have accounting experience themselves.

You can find more details here: https://www.french-property.com/guides/france/working-in-france/letting-property/taxation/furnished-accommodation

Micro-Foncier

The ‘Micro-Foncier’ is a tax regime in France designed explicitly for landlords of unfurnished rental properties. This regime simplifies declaring rental income for small-scale landlords by applying a flat-rate deduction to account for expenses, offering relief from complex tax calculations.

The Micro-Foncier regime is aimed at landlords whose annual gross rental income from unfurnished properties does not exceed €15,000.

Landlords with rental incomes above this threshold from unfurnished properties must consider other taxation options, such as the Régime Réel.

Under the Micro-Foncier regime, a 30% allowance is applied against the gross rental income to calculate taxable income. After using the 30% allowance, landlords are taxed on only 70% of their gross rental income.

Landlords with lower operational costs (below 30% of gross income) may find the Micro-Foncier regime beneficial due to its simplicity and the absence of the need to document expenses. However, if fees are regularly higher than this percentage, opting for the Régime Réel could result in a lower taxable income due to the ability to deduct actual costs.

Taxation of Lodgings Income

Owners renting out furnished rooms in their homes can benefit from an exemption from income tax, social security contributions, and business rates on the income these lodgings receive. This exemption is contingent upon meeting two essential conditions:

1. Main Home Requirement

1. 1. The rented accommodation must serve as the principal home for both the tenant and the owner. This condition ensures genuine home-sharing arrangements rather than commercial rental activities.
   2. Lettings to students who reside away from their permanent home for studies qualify for this concession. The lease acknowledges the property as the student’s main residence during the academic term.
   3. The accommodation doesn’t need to be the tenant’s principal home if they are employed under a seasonal work contract, extending flexibility to support seasonal employment patterns.

2. Maximum Rent Limitation

The tax exemption applies only if the annual rental rate does not exceed a specified maximum deemed by the government. These rates are subject to yearly revision to reflect economic conditions and housing market trends.

For 2024, the maximum rental rates are set at:

€206 per square meter per year in the Ile-de-France region.

€152 per square meter per year in other parts of France.

Example: Under this exemption, the maximum allowable annual rent for a 20-square-meter room in Ile-de-France is €4,120.

Exclusions: These caps exclusively pertain to the rent, meaning charges for additional services like meals, laundry, and electricity are not included in these thresholds.

Reporting and Taxation

If a landlord’s rental arrangements fall within these parameters, he or she does not need to declare this specific income on their income tax return, simplifying tax compliance.

This exemption from taxation for lodging income underscores the French government’s support for shared housing and the provision of affordable living spaces.

For more detailed information, check: https://www.french-property.com/guides/france/working-in-france/letting-property/taxation/lodgings/

3.2 Insurance Requirements

Protection against Non-payment of Rent

There are three primary forms of protection that a landlord can take against the non-payment of rent:

1. 1. Rental/Damage Deposit
   2. Insurance Policy
   3. Guarantor

None of these steps offer complete security and do not apply in all circumstances.

Rental/Damage Deposit

It is standard practice for a landlord to ask for a rental/damage deposit from a new tenant, which is refundable at the end of the tenancy. The deposit is called the dépôt de garantie.

However, the deposit is not obligatory, and a landlord cannot insist on one if the rent is payable two months or more in advance.

If the tenant should give notice to terminate the tenancy, they are not entitled to use the deposit held by the landlord instead of rental payments. They must pay the rent usually and seek a deposit refund when they vacate the property.

Insurance Policy

One of the most effective ways for a landlord to sleep peacefully at night is to take out an insurance policy against the non-payment of rent.

Such policies are called garantie loyers impayés (GLI) or garantie des risques locatifs.

When a landlord opts into this insurance, tenants must demonstrate their ability to afford the property. Typically, this means the tenant must earn at least three times the monthly rent and be employed under a CDI contract, an indefinite (or permanent) contract indicating stable and ongoing employment.

This requirement ensures that tenants have a reliable source of income to pay their rent, consistently reducing landlords’ financial risk.

Unfortunately, these GLI conditions make it very challenging for tenants in France who are not on a CDI with a French company to rent a place. Your best bet in that situation is probably to rent from a private owner who has not subscribed to GLI.

They are offered by around a dozen insurance companies in France, with the leading providers being Macif, Sacapp, Solly Azar, PGA Assurances, and Suffren Assurances associées (SAA).

Some banks, such as Crédit Agricole, Crédit Foncier, LCL, and Société Général, also offer the policies.

 

Policies coverage

Insurance companies that can cover you if the rent isn’t paid also want to check that your tenant is likely reliable. They’ll look at the papers you give them about your tenant’s job and income.

However, getting this insurance might be more challenging if your tenant is from another country and doesn’t have a solid work or business history in France. A retiree with a pension is usually seen as less risky.

If your tenant’s situation changes while renting from you, the insurance company agrees to that risk when it decides to insure you.

If your tenant misses a rent payment, you must follow specific steps, as outlined in your insurance policy, to be able to claim money from the insurance.

This insurance usually runs between 2.5% to 4% of the total rent you get, and you can often deduct this from your taxes. Insurance policies limit how much rent they’ll cover, but most of the time, this isn’t a problem because the limits are pretty high.

There are also limits on how much unpaid rent the insurance will cover. Some policies cap this amount of time, but others don’t.

Most insurance covers lost rent and the legal costs of dealing with a non-paying tenant. The insurance company usually prefers to handle the legal stuff themselves, but you’ll need to do your part, like sending out any required notices to the tenant.

Some policies offer extra coverage for things like your property being empty for a while or damage caused by the tenant, but you’ll have to decide if the extra cost is worth it.

If all this sounds like a lot, you can hire a property manager to handle things for you.

Use of a Guarantor

It is possible to ask a prospective tenant to provide a guarantor for the rent, mainly if the prospective tenant is young and on a low income.

The guarantee is called a ‘Caution’ and may be either ‘personal’ or ‘institutional’.

When renting out a place, sometimes tenants, especially younger ones or students who might not have stable jobs, need someone else to promise to pay the rent if the tenant can’t. This person is called a guarantor.

Guarantor Basics

The guarantor’s payment promise must be written down in the rental contract or attached.

Usually, guarantors need to live in France, so this could be harder if you’re renting to someone from another country.

There are two types of guarantor promises: one where the guarantor can be asked to pay immediately (solidaire) and another where the landlord has to try to obtain payment from the tenant first before asking the guarantor to pay (simple).

The promise might be for a set amount of money and time, or it could be open-ended. If it’s open-ended, the landlord needs to update the guarantor on how much rent the tenant owes at least once a year.

If the tenant starts missing rent payments, the landlord must tell the guarantor quickly, or they might lose the right to ask the guarantor for the money.

Institutional Guarantors

Since not everyone has a family member who can act as a guarantor, there are now some organizations that can help:

1. Visale: This service guarantees up to 36 months’ rent. It’s for people aged 18-30 or employees over 30 with insecure jobs. The rent must be under a certain amount, and the tenant must live in the place as their main home. This guarantee also covers some damage costs.

2. Fonds de Solidarité Logement (FSL): This fund helps with deposits, the first month’s rent, and utilities. It varies by location, so you’d need to check locally for details.

3. Loca-Pass: This helps tenants get an interest-free loan for their deposit. It’s mainly for people under 30, those in the private sector, unemployed, and students. The amount is capped, and the loan aims to make it easier for people to find a place to live.

Remember, if you’re going for one of these guarantees, you can’t also have private insurance against rent not being paid.

In summary, these are ways to help ensure rent gets paid, either by having someone promise to cover it or by using a program designed to help out. Knowing about these options can be helpful if renting out a place.

House Insurance on a French Rental Property

When you’re a landlord in France, you must ensure your property is insured. This insurance covers you if something goes wrong with the building, like structural problems, or if you need to fix things and someone gets hurt because you didn’t.

You can also get an insurance policy that covers more than just injuries or damages—it can protect you against tenants not paying their rent.

For unfurnished rentals

If you rent out an unfurnished place, your tenants must also get insurance. This covers things like fires, explosions, or water damage they might accidentally cause.

At the very least, they need “risques locatifs” insurance. Still, getting “multi-risques d’habitation” insurance is wiser, as it protects their stuff, like furniture and electronics, from damage or theft.

Every year, the tenant must prove that they’ve renewed their insurance. If they don’t get this insurance, you can end the lease.

Compulsory apartment Insurance

The landlord can require the tenant to subscribe to a home insurance policy through his contract to mitigate risks of water damage, theft of contents, fire outbreaks, and explosions.

This proof of insurance must be shown at the first rent and every year after the policy’s renewal, as long as the tenant is still involved in the contract.

The landlord may also propose to prefinance the insurance policy subscription and have the tenant repay it later if he is not financially ready to do so since it is the tenant’s responsibility.

If the tenant decides not to take an insurance policy, this may lead to a breach of contract, and the landlord can choose to cancel the lease.

For furnished rentals

Some types of leases for furnished rentals require tenants to purchase renters insurance, but it is not always mandated. For this reason, it’s important that you, as the landlord, have good coverage. In fact, you may want to make it a condition of the lease, as tenants are still responsible for any damage they cause.

Some guests might already be covered by their home insurance policies for short-term or holiday rentals for temporary stays, known as “garanti villégiature,” but it’s important to check this. This kind of cover usually lasts for a short time, up to three months.

You can also get a particular policy that covers anyone staying in your property for damage they might cause without suing them for compensation. This is handy when you’re renting out your place.

Adding a “clause of abandon de recours” means if something happens (like a fire or water damage caused by guests), your insurance will deal with it without going after the tenant for money. However, not all insurance companies will let you add this, which might cost more.

Most insurance policies have a “deductible” or “excess,” which you must pay out of pocket before the insurance kicks in. Because of this, you’ll probably want to take a security deposit from your tenants to cover any potential damages up to this amount.

Section 4: Tenant Management

4.1 Tenancy Agreements

A tenancy agreement is commonly called a bail. It may also more formally be called a contrat de location. Most tenancy agreements are made in writing, and each party’s rights and obligations are clearly stated.

First, a tenancy agreement (or “lease”) isn’t just any document. It’s the rulebook by which you and your tenant will play during the tenancy period. It outlines rights, responsibilities, and what happens if someone doesn’t follow the rules. Here’s what you need to know:

Four approaches to the preparation of a tenancy agreement are possible:

2. 1. Use one of the standard forms of pre-printed tenancy agreements that can be purchased from any good bookshop.
   2. Use of a property professional such as an estate agent or huissier who may themselves have a model contract that can be used.
   3. Preparation of an agreement by a notaire who will provide a tenancy agreement as an acte authentique.
   4. Use the government-controlled service at DossierFacile, an online service that provides all the documents you will need.

Check out our directory, Understanding Rental Agreements, for detailed directions on Types of Tenancies, Duration, Rent and Charges, Security Deposit, Maintenance Duties, Insurance, Notice Periods, and Forbidden Clauses.

In France, notarizing your agreement isn’t mandatory, but it can add an extra layer of security, making it easier to enforce in a dispute. Whether you go that route or not, ensure both parties have a signed copy.

The owner/landlord is not entitled to demand certain documents that are considered too personal and confidential. These include:

• • Photo portrait

• • VITALE Card

• • Photocopy of Bank Account Details

• • Certificate of Proper Maintenance of the Bank Account

• • Certificate of No Credit

• • Authorization of Direct Debit

• • Marriage Contract or Cohabitation Certificate

• • Personal Medical Records

• • Criminal Records (if applicable)

• • Extract from any Family Record

• • Any Financial Proof Intended to Reserve or Guarantee Your Accommodation

Rental contract

In France, a typical rental contract includes:

• • Names of tenant and landlord

• • Address of the rented apartment

• • If booked from the agency, the address of the rental agency

• • Start and end date of the contract

• • Contract renewal possibilities

• • Obligations and responsibilities of tenant and landlord

• • Rent and deposit

• • Insurance information

• • Clause about rent increase

• • Clauses about fines

• • Bank address to pay the rent

• • Inventory of the apartment

• • Utility information (if it’s included in the rent)

• • Check-in and check-out information

• • Information on notice periods for ending the contract

Section 5: Maintenance and Repairs

Minimum Condition Standards

The law says a property must be decent when you start renting it and throughout the time someone lives there.

What the Law Specifically Asks For:

– The building should be watertight, meaning no leaks.

– Floors, stairs, and balconies must be safe and not falling apart.

– Electricity and gas must be safe to use.

– There should be enough light in every room.

– Ceilings must be in good shape so nothing can fall from them.

– The place needs to be well-ventilated.

– There must be a way to keep the place warm safely.

– It should be enough cold water coming in, and it needs to be under enough pressure.

– Need to be a proper way to get rid of wastewater.

– No danger of getting sick from lead or breathing in asbestos.

– The kitchen needs space for cooking and a sink with hot and cold water.

– There has to be a toilet separate from where food is prepared, and a place to bathe in private, with hot and cold water. The place to bathe needs to drain away used water properly.

– The rules are slightly relaxed if the rental is just one room. You need at least a toilet (it can even be outside!), and a bathtub or shower isn’t required if there’s a kitchen sink.

So, in short, the law wants to ensure that rental properties are safe, healthy, and have the basic things people need to live comfortably. However, the specifics can be vague, and meeting these standards isn’t always done as well as it should be.

Minimum Space Standards

A property for a single person must have a minimum surface area of 9m² and ceiling height of 2.20m², or a total volume of 20m², with a minimum ceiling height of 1.80m.

The surface area increases to 16m² for two persons and nine m² for each additional person.

Major Building Works

The tenant must grant the landlord access to carry out any necessary repairs or works to bring the property into a proper state of repair.

No such right exists where the norms are already met, and the landlord merely wishes to undertake improvement works.

Where the significant works last for more than 40 days, the tenant is entitled to a reduction in the rent.

If the works are so substantial that they render the property unfit for habitation, the landlord is required to find suitable alternative temporary or permanent accommodation for the tenant.

Section 6: Ending Tenancies

Eviction

In France, a winter truce (la trêve hivernale) prevents landlords from evicting tenants during winter, including for reasons such as not paying rent.

At other times, the landlord has a right to evict the tenant if they fail to pay the rent on time, don’t take liability insurance, or for other severe conditions. Even in these circumstances, the landlord must notify the tenant.

Procedures for a landlord termination of lease contract

When the landlord gives a notice of termination, the notice must be sent out at the right time according to the law in France. Otherwise, the contract would be renewed.

A landlord cannot end a tenancy contract before the expiry of the term. This can only occur in case of a breach of the tenancy conditions, sale of the property, or landlord occupation.

Depending on the nature of the letting (furnished or unfurnished), the landlord gives a minimum notice period called “le congé.” The notice must state the reasons why the landlord wishes to recover possession.

• • For unfurnished lettings, the period length is six months;

• • For furnished lettings, the period is three months.

If the notice period is not respected, the contract is automatically renewed.

The landlord must find suitable alternative accommodation when the tenant is an older adult (at least 65 years old). This rule applies to both unfurnished and furnished lettings. It does not apply when the landlord is at least 65 or has the same resources test as the tenant.

Property Condition Report – L’Etat des Lieux

A pivotal step is making a Property Condition Report, known locally as L’État des Lieux. This document isn’t just paperwork; it’s the cornerstone of a transparent and fair rental agreement. Let’s unpack the essentials, ensuring you’re well-equipped for a smooth rental experience in France.

2. 1. One written in English can be accepted, provided it has been translated.
   2. It should be carried out before the tenant puts their belongings in the property and repeated on termination when all furniture and belongings have been removed.
   3. If the tenancy is furnished, a full inventory of the property’s contents should be taken.
   4. The condition report undertaken at the start of the tenancy should not be confused with the obligatory survey reports that are also required.

Think of L’État des Lieux as a snapshot of your property at two critical moments: when tenants move in and out. This detailed report captures everything from the property’s general condition to the nitty-gritty details like appliance functionality and the state of the floors and walls. It’s not about nitpicking; it’s about setting a clear benchmark for the property’s condition, safeguarding both landlord and tenant interests.

Who Prepares the Report?

Creating this comprehensive document is a team effort. Ideally, the landlord (or their representative) and the tenant should carefully walk through the property together, compiling the report. This collaborative approach ensures that both parties are on the same page from day one.

Can’t agree on the condition of something? The report notes this, keeping things transparent and upfront.

It is also essential to take photographs, and each party must sign and date the photos with the words ‘Bon pour accord.’

Nevertheless, one problem with this approach is that there may be disagreement about the property’s condition at the start or, more often, at the end of the tenancy.

Accordingly, a better approach, at least certainly for long-term lettings, is to engage the services of a professional person such as an estate agent or a huissier de justice who will prepare an independent report at the beginning and the end of the tenancy.

The main advantage of this approach is that it is the most effective way of dealing with any difference of opinion between the landlord and the tenant as, in any dispute, the word of the huissier is effectively the law.

Most of a huissier’s tariffs are determined by law, and the cost of preparing an état des lieux would be €200-€300.

In some cases, bringing in a third party, such as a professional inventory clerk, might be the best route, especially to guarantee impartiality and thoroughness.

End of Tenancy

The tenant is expected to leave the property in the same condition as they found it.

Revisiting the initial report, both parties compare the property’s move-in and move-out condition.

Normal wear and tear? No problem.

Significant damage or changes? Time to talk about repairs, replacements, or deductions from the security deposit.

What if there’s a dispute? If both parties can’t reach an agreement, they might turn to a conciliation service or, as a last resort, litigation. This is rare, though, as the detailed nature of L’État des Lieux typically helps avoid such extremes.

The landlord has two months to return the deposit.

If the repair cost exceeds the deposit amount, the landlord has the right to reclaim the additional amount from the tenant.

Failure to return all or some of the deposit is one of the most frequent disputes between landlords and tenants—one more reason to engage a third party to undertake the whole condition report process.

Disputes concerning the condition report can be referred to the Commission Départementale de Conciliation, which can be found by contacting your préfecture.

Why It’s Non-Negotiable

Skipping L’État des Lieux isn’t just a bad idea—it can severely impact your rights. For landlords, it means a more challenging time proving damages weren’t pre-existing. For tenants, it could lead to unfair charges for damages they didn’t cause. In short, this document is your best friend regarding clarity and fairness in the rental process.

Section 7: Dealing with Disputes

7.1 Mediation and Arbitration

As a first step, sending a notice of expiry to the tenant before going to court is essential. Since it could be temporary, the most appropriate solution would be to find an arrangement between the two parties (for example, a payment delay). 

Options for resolving disputes without court intervention:

2. 1. Appeal to the persons who have vouched for them
   2. Call on a guarantor body to set up a file and subscribe to unpaid rent insurance or “Unpaid Rent Guarantee (GLI)”
   3. Call Action Logement if the tenant has opted for the Visale guarantee
   4. Call on a bailiff (the costs will be added to the unpaid and will be paid by the tenant)

7.2 Legal Recourse

If it becomes abusive, unreasoned, and permanent, here are the solutions available to you: 

2. 1. Take the tenant to a district court (excluding winter break)
   2. Call Commissioner of Justice:

      https://www.demarches.interieur.gouv.fr/particuliers/loyers-impayes-expulsion-locataire 

The National Assembly of France adopted a new measure in favor of property owners/landlords to take immediate action in unpaid rent cases. This new measure:

2. 1. Allows them to terminate leases as soon as possible if rent hasn’t been paid.
   2. It helps diffuse the situation before it reaches the local courts.
   3. Helps avoid abuse of tenants and sets a precedent for an anti-squatting law. 

As a landlord, you can avoid unpaid rent even before you sign the lease with a new tenant. Here are a few measures you can take:

• • Always analyze the prospective tenant’s rental file

• • Ask for Proof of Income/ Proof of Employment

• • Ask for a Security Deposit

• • If the prospective tenant claims they don’t need to pay a deposit, ask for proof that their income is at least three times higher than the amount of rent. 

• • Use a Guarantor or hire a Guarantor Company (i.e. garantme.fr)

• • Subscribe to Unpaid Rent Insurance or “Unpaid Rent Guarantee (GLI)”

• • Include a clause that will allow termination of the lease in case of unpaid rent.

Section 8: Resources for Landlords

Government and industry bodies that provide information and support:

Rental of real estate information France insider Se Loger: Classified advertisements for property sales and rentals and advice for tenants and homeowners in France.
National Institute for Statistics and Economic Studies (INSEE) Body responsible for raising rental rates
ANIL (Agence National pour l’Information sur le Logement) National organization to advise landlords (propriétaire) and tenants (locataire) on legal, financial, and fiscal matters
Consuel website (in French) For impartial advice on your current electrical system
Électricité de France EDF
Professionnels du Gaz Find registered professional gas installers.

Appendices

Top tips for landlords

 

Stay updated!

What truly sets the French rental market apart is the balance between landlord flexibility and tenant protection. While landlords commit to a minimum duration, tenants can leave earlier, provided they give proper notice.

Remember, furnished or not, tenants’ rights remain robust if the property serves as their primary dwelling. Transparency and thoroughness in providing required surveys to prospective tenants, even for seasonal lets, are non-negotiable.

The dynamic real estate market demands constant engagement. Even after securing tenants, keep your property in the spotlight to stay ahead of market trends.

Stay updated on local regulations. French rental laws protect tenants, and staying informed helps you navigate the market confidently and legally.

Elevate the legality of your tenancy agreements with a notary’s signature. This offers you an extra layer of protection. Accepting payments via cheque not only eases transactions but also equips you with essential banking details for potential future needs.

Don’t overlook the importance of an independent property inspection at the beginning and end of a tenancy. It’s your safeguard.

Lastly, remember the golden rule: a tenancy agreement’s renewal is automatic unless formally terminated.

There you have it – your crash course in preparing a tenancy agreement in France. Approach it with the seriousness it deserves, and you’ll lay the foundation for a smooth, mutually respectful landlord-tenant relationship.

 

Please note: This article does not constitute legal advice – the information on this page has been prepared solely for your information. As we are not a law firm and act as a platform, we can and may share our estimations, but we cannot give you legal advice for your individual further proceedings.