13. Protection Against Arrears of Rent on a French Rental Property
- Rental/Damage Deposit
- Insurance Policy
- Guarantor
13.3. Use of a Guarantor
It is possible to ask a prospective tenant to provide a guarantor for the rent, particularly if the prospective tenant is young and/or on low income.
The guarantee is called a 'Caution' and may be either 'personal' or 'institutional'.
13.3.1. Personal Guarantors
Personal guarantees are more often used for students or young persons in insecure employment, when their parents act as the guarantor.
There are a number of specific formalities that must be adhered to, failing which the undertaking may be unenforceable.
The agreement to act as guarantor must be in writing and must be either part of the tenancy agreement or a document annexed to it.
Clearly, the guarantor must also be resident in France, so this option is unlikely to be available if you are letting to someone from overseas.
The guarantee may either be one that is solidaire or simple.
It is far more desirable to obtain the former as it allows immediate recourse against the guarantor, whereas this is not the case with a caution simple.
The guarantee may be for a maximum amount and a definite period or it may be for an indeterminate amount and period. If the latter is the case the landlord is obliged to notify the tenant of the state of the account at least once a year.
If the tenant develops any arrears of rent then the landlord is obliged to advise the guarantor without delay or risk losing the guarantee.
There are standard letters that can be used but you would be best to have the agreement prepared and signed through a notaire as part of the contract procedure.
You are not entitled to ask for a personal guarantor if you are using an insurance policy against the non-payment of rent.
13.3.2. Institutional Guarantors
As the number of family members willing to act as guarantors has declined in recent years (other than for students), some institutional options have emerged.
There are three main institutional options available:
- i. Visale
- ii. Fonds de Solidarité Logement (FSL)
- iii. Loca-pass
Whilst these institutional guarantees have some merit, they do have their limitations.
i. Visale
This is a guarantee offered through the agency 'Action Logement' at Visale.
It guarantees up to 36 months rent, whatever the cause of the difficulties of payment by the tenant.
It also covers any costs you may incur for damage caused by the tenant up to 2 months rent.
To benefit your tenant must present you with a certificate provided by Action Logement that they benefit from Visale. It must be done before you sign the tenancy agreement.
The rent cannot be greater than €1,300 a month (€1,500 in Paris) and must be the principal residence of the tenant.
The tenant must either be a person aged between 18-30 years, or an employee more than 30 years on an fixed contract or having relocated to find work and with a salary less than €1,500 a month.
The guarantee is not cumulative with a private insurance policy.
ii. Fonds de Solidarité Logement (FSL)
The Fonds de Soldarité Logement (FSL) make available grants and loans for the costs of the rental deposit, pay the initial rent or transaction costs, relocation costs, insurance.
They can also act as a guarantor for rental payments and may also give assistance in the form of grants or loans with rental payments, and utility costs. The assistance may take the form of either a loan or a grant.
The detailed regulations and availability of funds varies between départements.
You should contact the local mairie or the préfecture for details of the FSL in your area.
iii. Loca-Pass
The loca-pass is a separate fund, referred to as 1% logement because it is funded by a 1% housing levy on large employers.
The aim of loca-pass is to help prospective tenants to obtain access to housing though the provision of an interest free loan for the rental/damage deposit. The maximum is €1,200.
The interest free loan for a rental deposit is available to many prospective tenants - those under 30 years old, private sector employees, those unemployed and students. The funds are managed by agencies that have been established or mandated for the purpose.
You can also contact the one of the organisations responsible for distributing the funds by visiting Loca-Pass.
You can also make enquiries about the provision of a loca-pass in the first instance to the Chambre de Commerce in your area.
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