Following a sharp downturn due to the economic crisis in 2009, the French rental market bounced back in 2010.

According to ‘Clameur’ (Connaître les Loyers et Analyser les Marchés sur les Espaces Urbains et Ruraux), an authoritative source on information on rent levels in France, the rental index rose by 2.5%.

The index is for properties let on an annual basis, not those of holiday lettings.

Nevertheless, despite the increase in rents, many landlords still face high rental vacancy levels, albeit lower than those in 2009.

The upturn in 2010 is expected to continue in 2011, but it masks significant disparities between regions.

Rents last year went up in 24 out of 26 regions after having gone down since 2007.

‘Since 2007, during a period when market activity slowed down, it was reflected in the level of rent increases - 2% in 2007, 1.6% in 2008, and 0.1% in 2009’, says Clameur.

Throughout this period the average vacancy period rose sharply, due to the sharp drop in demand.

In 2010, the market improved, when rents for new lettings increased by 2.5%. This general increase occurred across all types of accommodation.

Nevertheless, Michel Mouillard, Professor of Economics at Paris Nanterre and author of the study, noted that the rise in rents of 1.5% higher than inflation remained below the annual average increase of 3.2% recorded since 1998.

According to the author, this phenomenon of lower than inflationary increases will continue, due to the controls imposed on landlords on the rent increase they can impose each year on existing tenants.

Changes in tenants and lease renewals that take place every three years in unfurnished rental accommodation allow the owner to freely set the rent.

However, increases during the period of the lease are regulated, and cannot exceed an index based on inflation.

Therefore, existing tenants undergo annual rent adjustment based on inflation with a possible uncapped upward revision every three years.

Average Rent Levels

Under these conditions the average rent nationally in 2010 was €12.3 per m², although with significant disparities between regions and different types of property.

In the regions at the top end was Ile de France, where average rents were €17.8m², and Provence-Alpes-Côte d'Azur at €12.3m².

At the bottom end was Franche-Comté, Auvergne, Champagne-Ardenne and Limousin with average rents between €8.5m² and €9m².

Rental levels within the major towns and cities were higher than these regional averages, reaching €22.4m² in the capital of Paris, beating all previous records.

Other major towns also saw rents rise ahead of the national average, such as Lyon where rents rose 5.9% (€12.1m²), Lille 5% (€13m²), Nice 2.9% (€14.1m²), Montpellier 3.2% (€13.7m²), Marseilles 3.2% (€13.7m²), Bordeaux 3% (€12.1m²).

The only major town where rents went south were in Toulouse, where rents fell by -2.2% (€11.4m²), reflecting a wider downward trend in the region.