8. Rent Level

As a general rule, the level of the rent on a new tenancy can be freely determined between a prospective tenant and the landlord.

Nevertheless, controls have been imposed on rental increases on new unfurnished lettings within the major towns and cities of France, provided the property is the main home of the tenant.

These controls mean that the rental on the new letting cannot be any higher than that of the previous letting, adjusted by the inflationary increase in the rental index - the Indice de Référence des Loyers (IRL) .

There are exceptions to the rule, such as where major works have been undertaken, or where the previous rent was manifestly too low in comparison with other local rents.

Once a rent has been agreed, and a tenancy agreement has been signed, there are specific controls on further increases in the level of the rent during the period of the tenancy.

Since 1st July 2019, in Paris and in certain other major cities, there is a cap on the maximum rent that can be charged, in a legal control called l’encadrement des loyers.

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

It is possible for a landlord to justify a rent above the maximum, but only provided the property has exceptional characteristics from other properties in the area.

Since January 2021, in 28 conurbations of housing stress, a landlord is not permitted to increase the rent on a new tenancy (or renewal) if the thermal insulation value of the property is greater than 331 kWh per square metre per year, i.e. a F or G class dwelling.

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.

This law applies nationally from 25th August 2022.

Specifically, 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;

• increase the rent following work to improve the accommodation which is the subject of an agreement, by an express clause

• propose a rent increase to the tenant when renewing the lease, in the event of manifestly undervalued rent.

From 1st January 2023 a property that consumes more 450 kWh/m2/ year cannot be used for letting purposes

With effect from 1st January 2025 this This applies to all those classed 'G' ( 420 kWh/m2/year), to those classed F from 1st Jan 2028 and to those classed E from 1st Jan 2034.

As of 1st April 2022, there are controls on advertisements for properties to rent in housing stress areas. The advert must state:

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

• the amount of the increased reference rent (loyer de référence majoré): the maximum rent authorised by the rent control programme;

• the amount of any rent supplement (complément de loyer): landlords are entitled to add this supplement when special comfort and location characteristics justify it. This supplement can enable landlords, if certain conditions are met, to raise the rent above the increased base rent.

The corresponding amounts must be preceded by 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.

If the tenancy agreement is silent on any rental increase then the landlord cannot impose one.

VAT (TVA) is not, in principle levied on rent, whether furnished or unfurnished letting. However, services provided as part of the letting of furnished accommodation do attract a VAT charge, provided the landlord is registered for VAT.

Landlords of tourist accommodation (hotels, chambres d'hôtes, camping and caravan sites) may also be obliged to collect a tax called the taxe de séjour from their guests. The decision to levy the tax is at the discretion of each local council.

The level of the tax varies by type and quality of accommodation but is between 0.20 cents and €1.50 per night per person (including children aged 13+ years).

Some landlords do not charge their guests directly, but do so indirectly via a return made each year to their local council.

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