Short term rentals in Paris apartments: Green light ahead

The long-awaited hope for a legal structure to legitimize rental activity for thousands of second home owners in the French capital may soon be a reality. 

Renting a furnished apartment short-term in Paris may become legal again, thanks to a new study commissioned by French Prime Minister Manuel Valls. Still a work in progress, the first segment of the report found that there was strong, important demand for short-term rentals in the French capital and suggested creating a new legal framework permitting them.

Ordered in June of this year, the study is led by the French auditing body, the Inspection Générale des Finances (IGF). As of now, the initial report has revealed the following key findings:

-There is a strong demand for furnished rentals in Paris, especially in certain “tight” zones.

-This segment of the rental market meets certain specific and growing needs.

-Short-term rentals fulfill different essential requirements than commercial rentals and hotels.

-This segment of the rental market attracts investors to the capital.

-The furnished residence market does not require increased regulation. Instead, the taxation of rental income should be reduced and made simpler.

Currently, renting out a furnished second-home in Paris for less than a year — or 9 months to students — is considered to be illegal by the Paris mayor’s office. In 2009, the City of Paris decided to begin applying longstanding but dormant laws – L. 632-1 and L. 632-7 of the Construction Code – that required owners of short-term rental apartments to obtain specific permission from the city to continue their rental activity. A precondition to such approval was that the apartment have “commercial” – not residential – status, a difficult and costly change to make.

The City of Paris began cracking down on short-term rentals, heavily fining multiple property owners. One of them, the owner of four furnished rental properties, was fined 35,000 euros and order to discontinue her activities within two months.

“The change is welcome – and long overdue” says Kathryn Brown, client service director for Paris Property Group. In her view, “the mayor is placing a restriction on property that takes away a lot from the property owner and Paris visitors, without achieving any serious benefit for the city. Any change from that is a change for the better.”

The federal law applies not just to Paris but to any French city with over 200,000 inhabitants. Even so, the capital is the only city thus far to strictly interpret this law.  “In Marseille, we believe that owners may use their properties as they wish,” says Marseille city deputy Dominique Tian. “The City of Paris’ position is questionable in my opinion.”

The IGF report proposes the creation of a new segment in the rental market called “temporary rentals,” with rental periods from one week to six months. The final report is expected to be released in January 2016.

Photo credit:  Lima Pix