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Rent Control – 3 Years In
A new rent control system was started in Paris in July 2019. After that the system was set up in the cities of Plaine Commune, Lyon and Villeurbanne in 2021. Next the system will take root in Bordeaux and Montpellier. Let’s take a look at the past three years and see how this new system has effected the rental markets and consider the current rental markets as this system is being set up in. 62% of real estate advertisements online in Bordeaux before the application of the law are above the new reference thresholds, compared to 27% for Montpellier.
Almost half of the rental ads do not respect the thresholds in force (47%), a trend that has been almost stable since 2021 (50%);
Furnished apartments remain the first to be affected by overruns with 54% of advertisements off the charts (compared to 33% for unfurnished) and an average monthly overrun of €243;
Small areas (less than 20m²) also remain particularly affected with 61% of illegal advertisements;
Rents remain up by +0.7% in 1 year.
One year after its implementation, 52% of ads do not comply with the framework, with an average overrun of €115 per year;
Rents have increased by +1.1% in one year in the inner suburbs of Paris;
Bordeaux and Montpellier:
In Montpellier, only 27% of ads were above the new ceilings established when the system was implemented on July 1, with an average annual overrun of €67;
In Bordeaux, a city where rents have increased by 4.2% in 2 years, 62% of ads posted before the application of the law are above the new reference thresholds. The amount of the monthly excess would be €200.
3 years after the implementation of the system, 47% of ads remain outside the limits in Paris
In 2022, nearly half of Parisian advertisements do not respect the thresholds in force (47%), a trend that has been almost stable since 2021 (50%). Furnished apartments, particularly targeted by the system, remain the first to be affected by overruns with 54% of advertisements off the charts and an average monthly overrun of 243€, an amount that is still on the rise and which, over the year, increases of 144€ the overruns observed in 2021.
A clear improvement is however observed for empty rentals, with only 33% of illegal advertisements in 2022 against 39% in 2021, for an average overrun of 166 €.
Small spaces (less than 20m2) remain particularly targeted by overruns with 66% of illegal advertisements.
The rise of Paris rents
While they observed a downward trend in 2021 (-1.6%), Parisian rents are up slightly again in 2022 with +0.7% increase, in a context of return of demand and in a post market -pandemic. A trend driven by empty apartments, whose rents have risen by +0.8% over the past year (compared to 0.4% for furnished apartments).
“We are seeing a recovery in the rental market, but the level of rent remains below the pre-covid level, particularly in the case of furnished rentals, a market very affected by the pandemic. However, it is possible that management was able to limit the rise in rents in Paris. By way of comparison, in the suburbs, rents increased by +2.4% between 2019 and 2020, while rents were not regulated.” adds Barbara Castillo Rico, Head of Economic Studies at Meilleurs Agents.
In Plaine Commune, 52% of advertisements are not in order, with an average excess of €115 per year. Rents in the Paris suburbs also continued to rise, with an increase of +1.1% in 1 year.
“The system is less well targeted in the Plaine Commune. Indeed, the thresholds are deﬁned at the scale of the city, which may be considered less relevant given the heterogeneity of the market between its districts. The definition of the zones deﬁned from the IRIS, method used in Lyon and Villeurbanne allows a more granular reading and close to the reality of the market.” analyzes Barbara Castillo Rico.
The rental market in Montpellier and Bordeaux
In Montpellier, where rents have been rising steadily since 2019 and have climbed another 2% in 1 year, management has now been active since July 1. The new thresholds seem consistent with market rents since only 27% of advertisements were above the new ceilings established when the system was put in place on July 1, with an average annual overrun of 67€.
In Bordeaux, where rents have increased by 4.2% since July 2020, the situation is quite different. In fact, 62% of ads placed online before the application of the law are above the new reference thresholds. The amount of the excess amounts to €200 per month on average, or €2,400 in total for the year.
“In Bordeaux, the framework comes into effect in a context of very marked rent increases. We will have to follow this dynamic in the months to come before we can see a real and lasting effect on rents. It should also be remembered that an advertisement exceeding the authorized ceilings is not necessarily illegal: the law authorizes landlords to request an “additional rent” if the accommodation has special qualities not taken into account by the framing. ” adds Barbara Castillo Rico.
Original Article published on Meilleur Agents
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