In this blog I am posting about the threatened prosecutions of owners, by the City of Paris, who are renting private apartments in Paris for short term rentals, especially vacation rentals.
Short term is defined for a period of less than a year, or nine months if it is to a student. Any period less than that is illegal and subject to heavy penalties.
These laws are for properties designated as residential. A commercial property, that is one rated and designated in the planning as commercial is not the subject of these notes. The designation ‘commercial’ made by the local Mairie, it is nothing to do with the ownership of the property or the activity, business or use of the property. Simply registering an office or a business at an address does not make that address a ‘commercial’ address.
The area concerned is central Paris, although the laws do apply to any city in France with a population greater than 100,000 people.
There are only a few posts and some responses here in this blog and I advise anyone interested to read though these and check the links I give.
I have several reasons for blogging about this subject. I do have a genuine concern that many people are innocently taking unreasonable risks through having ignorance of this matter and are also being ‘duped’ by some unscrupulous agents and advisers who are fully aware of the intentions of the governing bodies. – I am looking for valid opportunities to create a service to assist owners and renters. – I have a personal interest in that my daughter has had difficulty finding a place to live in Paris center, which has revealed to me the scale of the problem.
I’m being asked what my conclusions are from two extensive interviews I have now had recently with the heads of the departments and offices concerned with enforcing these laws and who are currently in the process of applying to the Judiciary for prosecutions.
So far I have just blogged about the facts which I have been given. I publish here, an email exchange I have had today where I say more about what I personally understand from studying this matter.
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On Sun, Nov 29, 2009 at 9:47 AM,
I’d like to read the rules you describe, but I can’t find them, either on the Paris site which you mention or on the site of Direction de Logement et Urbanisme. Can you give me the specific reference? Are these guys really going to go after the 38,000 people who rent tourist apartments in Paris? That seems to me a decision that could have serious economic consequences for the city. Moreover, it would put tremendous pressure on already-scarce hotel space. This seems to me like a definitely bad idea, from a “French” –i.e “Paris” point of view. Where will these hundreds of thousands of tourists go? They are, after all, an important source of income for the local economy: will we end up with no tourist apartments in Paris, when every other city in the world offers tourist apartments? This is crazy.I can’t believe the lobbies for the restaurants, etc, would accept this decision with no objection.
But I’d like to read the original (French) dox.. (BTW, I note that the “priorities” of the Bureau de Logement make no mention of any kind of crack-down on these so-called “illegal” apartments. I wonder if this isn’t the hobby-horse of a few people in an office in the Hotel de Ville. I really find it hard to believe that this is serious public policy.
But of course many serious public policies are definitively nuts, so why not adopt this one?
Thanks, Michael Padnos
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Hello Michael
There are links on my blog at http://2337.com to the actual law relating to Article L651 – recent modifications include the increased penalties applied.
I have no doubt that the department is very serious about taking some high profile action very soon. They have shown me files last week, which they have prepared to present to a Judge with the intention to prosecute..
In my opinion, from conversations with the bureau concerned, I doubt if there is any current plan to prosecute the thousands of individual private residential owners who rent out their own apartments for a few weeks each year. These private owners probably account for most of the 38,000 apartments mentioned. However, I am certain that in the very near future there will some legal action taken against a few people who let their properties through a third party agency. These actions will result in some strong publicity and make it crystal clear that anyone renting an apartment that is not classified as a commercial property for period of less than one year (nine months for a student let) is breaking the law and risks heavy fines or imprisonment.
It will then be up to each owner to decide whether to risk flouting the law and getting caught. I guess much like deciding whether to speed on a road or jump a red light, if you get caught, you will pay.
Another point to consider is that in addition to breaking the zoning laws, an owner is likely to be breaking the law relating to the agreement with the co-propriete of their apartment building and other local laws by renting short term. These illegal actions will also invalidate any insurances, so an owner will be taking a big risk. Most cases concerning property or taxes (this illegal rental activity concerns both) brought to court in France are through the denouncing by neighbours, so the neighbours of an apartment owner renting to holidaymakers will soon be visible on the new enforcement agencies radar.
The actual difference to the vacation accommodation in central Paris, even if all the apartments were suddenly taken off the market, would be well under two percent of the available tourism accommodation. As this is not going to happen overnight, I do not see how this would make any difference to tourism revenue in Paris as there will be other accommodation services to fill this demand, not just hotels. The are many correctly registered tourist apartments in Paris, new aparthotels are being opened and the hotel industry is being overhauled (recently similar laws cracked down on the hotel industry and cleaned that up).
There will always be apartments in Paris for vacationers to rent short term, simply these will be correctly registered and insured, not illegal and exploited as most are at present.
The bureau is quite happy to announce their imminent ‘crack down’ to the press and have asked me to invite any journalists for an interview with their directors. This is serious public policy approved not only by the Mayor personally, but also now by the prefecture.
My reasons for publishing as much as I can about this is to counter the crooked practice of some agents and individuals, who, despite knowing about these laws for over a year, are continuing to tell clients looking to buy property in Paris that they can the get a good return on their investment by renting out short term to vacationers. By making this false statement they themselves are taking a risk and an ‘investor’ could sue them for misrepresentation.
Other reasons I have are to investigate alternative services and examine them to see if there is a business opportunity, I would also like to see a lot more of these short term lets come into the local housing market.
An important part of the charm of Paris is that central Paris is still a living and breathing city where real people live, not a sterile business center which the city of London (and many other major capitals) has become. Take away this element of local shops, markets, cafes and the ‘life’ of Paris and you will destroy what makes Paris so special and thus destroy a reason millions of tourists visit. So it is not a blow against tourism, but the reverse (this was told to me by the head of the bureau last week – and I tend to agree with him)
There are options, a change of use can be applied for, although this would be very expensive to get and it would not be granted if any one neighbour objected (or if the local Mayor did not agree). It would be expensive as an area of commercial property (in most cases double the area) in a similar situation would have to surrender their commercial rights and revert to residential.
I do not think this policy is ‘nuts’. If your business is the rental of residential properties for tourism in Paris and you sublet or arrange rentals for private owners, then your business depends on those owners continuing to break the laws. If you know about this and do not advise them of the risks, then they could sue you. If you are an owner/landlord you are risking heavy penalties if you continue to rent accommodation illegally.
This initiative of the local governing authorities in Paris will ‘clean up’ some very unsavory operations of offshore companies who have evaded taxes, deceived their clients and are putting property owners at risk. It is hoped that it will also stop some of the parasitic activities of ‘agents’ in Paris who blatantly tell clients and investors untruths about the rental market for residential lettings.
Tony
9 Comments on “Paris Apartment Rentals Initial Summary”
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Regarding the reasons cited for the application of this law to alleviate the chronic shortage of affordable housing in the city centre see our posts about this from 2006 – it really is hell out there for those who need affordable husing in the city centre:
http://www.bonapartparisnews.com/2006/11/jeudi_noir_pap.html
Posted on November 30, 2009 at 2:31 am.
Dear Tony
Although I appreciate the extent of the information you give here, I disagree with the crusade you have undertaken against offshore rental companies. Reading your blogs highlight repeatedly the passionate energy you deploy against vacation rental businesses.
Why do you jump to conclusions that agencies are out to get owners , dupe them or misinform them out of greed? We are all in this together and I urge you to reconsider the general statement you tend to make on the industry.
Our agency is located outside of France, it is completely legal, it is fully insured and it pays dutifully its taxes every year. As we are located in Europe, the Convention the Rome applies and therefore we are not evading the system. Our terms and conditions and our owners mandate have been revised by three different lawyers (of which one is French) no later than last year. Each owner own a full liability insurance with an annex that extend to the liability of their renters. We do not go lightly on these matters.
This law is going to put a decade of our work to shred if it is enforced in this fashion. You may not care about the repercussions this has on honest and hard working people in the industry but your comments on the practice are harsh, and in many instances unjustified and unfair.
I agree with Michael that this law is crazy and completely counter productive. Once again, France is putting us in a formidable catch 22.
The city cannot do without private rentals and we all know very well that even with the best of intentions, a change of status is impossible to get. Who already has “sous le coude” another commercial premise which they will gladly turn into a residence so to get the said authorisation.
I am in favor of a form of legislation and the obtention of a permit for owners is a good idea, but when you know that the conditions in which you are granted a permit is a non-start for most owners, what is the point of this? La Mairie may as well forbid short-term rentals altogether.
I may seem to take it personally but that is because it touches us at the core of our honest professional business activity which up until last year was a completely legitimate business to hold. All of sudden we have become “outlaws”, illegal, unscrupulous, negligent…
If this is a decree, one can only hope it will be revised to better accommodate a business that is thriving because clients prefer private homes to hotels, and which brings millions of euros every year to the tourism industry of the most visited city in the world.
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Katia
I am not crusading against honest businesses like yours. However, unfortunately, there are some unscrupulous companies who do operate in this sector, as I know to my cost. You do say “in many cases” my comments are unfair about agencies. In my experience of over 12 years in this industry I believe that the vast majority are honest and reliable, but you imply that ther are some bad ones and I know this to be trye.
Like Susie (see her comments below) I would not like to see Paris turn into a kitsch extension of Disneyland. I also believe that residential accommodation should be protected for local residents in an area where there is a housing shortage, I have been personally caught up in this.
I have also found to my considerable cost that the laws of France are not always sympathetic to an entrepreneur and had to close a very successful rental operation in France as I did not have an immobiler license or the luxury of working offshore.
There is no intention to ban visitors renting apartments, a good business can be created from this opportunity to only rent those apartments with existing commercial rating (there are many of these) and also to help some owners apply for commercial approval. The affect on tourism is not considered a factor, this is in reality a very small percentage of accommodation units and a recent phenomena.
I have over 10,000 subscribers who ask me for information about visiting and investing in France. They are significant users of accommodation in Paris and I intend to ensure that they are aware of any problems or risks there may be.
I am sure your company takes every precaution to ensure correct insurance cover, but if the occupation of a property is in fact a criminal act – you can bet that no insurance company is going to miss that loophole in the event of a serious claim.
Posted on November 30, 2009 at 3:51 am.
Tony,
Please keep me in the loop on these developments. As you are aware, I have been an active developer of fractional ownerships in Paris since 2006 through Paris Home Shares, and I have always taken the position that allowing short term rentals on our properties is an open invitation to trouble, in the form of re-classification as a business, French income taxes and so on. Therefore, we have always prohibited rentals and the Owners appreciate this. Sadly, many of not all of my competitors in the fractional ownership business have ignored (or scoffed at) my concerns, and openly touted the ability to rent out their apartments for short term rental income.
I sense that there will be a flood of apartments thrown on the market for sale by foreign investors, which will further depress Parisian real estate values, at least short term. But in the end, I believe that there will always be a demand by many who love Paris, for a pied-a-terre of their own. In that respect, I think that our business will be a beneficiary of this crackdown. Fractional ownership has always made sense, and it does so now more than ever.
While I am sure that there exists a serious shortage of housing for local Parisians, I suspect that this may also be a crackdown on undeclared rental income by offshore owners, which is also probably justified.
Thanks for bringing all of this to our attention.
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Hi Steve,
I doubt there will be a ‘flood’ of properties on the market – nor will this threat of action depress the (currently buoyant) market price. I am sure owners will wait and see, but if they are wise, they will insist on agencies protecting them from legal actions and to withdraw properties from agency listings.
I really believe these actions are to improve and maintain the quality of life in the center of Paris – I have been thinking about this and just posted on my blog at Twiku.com
Believe me, there is a serious shortage of accommodation in the center for Parisians – the fear of Paris becoming another desert like Venice, Rome or London is something the city is too too well aware of. This is something I am sure you (as a lover of the city) can appreciate – the uniqueness of Paris is at risk from the popularity of Paris.
You bring another item to the agenda – tax evasion – this is obviously something other powers in France are looking at, both from the (few) rotten agencies keeping money from rentals in France offshore, but also owners who do dubious deals with the same agencies. I know some high profile websites are being looked into, (some not for the first time) but this is not an area that I can comment or advise on.
Fractional Ownership has, I believe, a positive place in this. I plan to reactivate my site (now three years old) on Factional Ownership in France HarmonyOwnership.com and offer sales, help and advice again.
Posted on November 30, 2009 at 6:59 pm.
Crackdown on Private Landlords in Paris « Warning about apartment scams on Craigslist Paris (and elsewhere) says:
[...] Further details can be found here. [...]
Posted on December 4, 2009 at 1:26 am.
Where can one verify whether a property has been properly classified as commercial prior to renting it from the owner?
Posted on February 2, 2010 at 12:29 am.
The only way is to ask the owner or the Mairie (town hall) – very few apartments advertised will be classified as commercial so the owner may not even know what you are asking. Contact details for the agencies of the town hall re on this site
Posted on February 2, 2010 at 10:13 am.
Thanks for the reply, but I wonder if this will simply be too impractical for foreigners wishing to rent a vacation apartment in France. If I understand correctly, if they want to make sure the rental is legal, they would have to contact the mairie of the arrondissement where the apartment is located, then from there figure out which department they need to speak to, plus if they don’t speak French….it’s all very complicated. Is there no certificate the owner should have that they can simply ask to see?
Posted on February 2, 2010 at 6:45 pm.
I agree and understand – I doubt that many owners yet know that they are breaking the law by renting short-term. The City Council says there are 38,000 illegal rental apartments in Paris, so it is most unlikely that they will all be prosecuted this year, only a few high-profile cases to bring it to the attention of most owners. If an owner then continues to rent then the fines (and imprisonment) they risk are large.
There is no certification, yet, the question you should ask is “Is the apartment correctly registered as a commercial property for short-term rentals” – what you should ask for is a copy of the insurance policy which must cover any occupant for civil liability – if the property is rated as commercial then this will be clear on the policy.
If there is no commercial policy, then an occupant is unlikely to be covered by any accident insurance – insurance companies love finding ways of not paying.
Basically, if an advertised rental does not tell you that it is correctly commercially registered and insured, then it probably isn’t, as having this is a very positive selling point.
Hope this helps
Posted on February 2, 2010 at 6:56 pm.
Thanks, that’s helpful.
Posted on February 2, 2010 at 8:56 pm.