An unprecedented evaluation of the effects of rent control in Paris, an experimental system put in place until November 2026, shows that this mechanism has a moderating effect on the increase in rents in Paris, which is specific to it, distinct from effects of inflation, changes in the IRL or the economic situation.
Rent control has had a moderating effect on the increase in rents observed in Parisian private housing since July 2019, concludes a study by L'Atelier Parisien d'Urbanisme (APUR). Between 1is July 2019 and June 30, 2023, rent control in Paris allowed a reduction in rents of -4.2% compared to the situation without control. This reduction in rents represents 64 euros per month of avoided expenses for tenants, if we base ourselves on an average rent, or 768 euros per year.
An experimental device
Planned for a period of five years by Law No. 2018-1021 of November 23, 2018 relating to the evolution of housing, development and digital technology (ELAN law), the experiment in rent control was extended until 2026 by Law No. 2022-217 of February 21, 2022 relating to differentiation, decentralization and deconcentration and relating to various measures to simplify local public action (known as the 3DS Law). The ELAN law opened this experimental system for regulating rents in the private sector over a perimeter defined by the communities, with regard to four criteria: a significant difference between the level of rent observed in the private rental stock and the average rent practiced in the social rental stock, a high median rent level, a low rate of housing starts, compared to existing housing over the last five years and limited prospects for multi-year production of housing and poor prospects for their development. Paris was the first candidate for this experiment, quickly joined by many cities.
The rent control mechanism in Paris
The rent control system in Paris is based on three references set each year by prefectural decree:
• a reference rent,
• an increased rent (reference rent + 20%)
• a reduced rent (reference rent – 30%).
These reference rents are determined based on the rental market observed and broken down by geographic sector. In principle, the rent excluding charges for rental accommodation cannot exceed the increased reference rent. As an exception, if the quality of the property justifies it, the investor-lessor can opt for additional rent. As for the reduced reference rent, it allows this owner to increase the amount of rent below this threshold, particularly in the event of re-rental. In practice, sanctions are still rare. For leases signed from August 18, 2022, no additional rent can be charged for the most energy-intensive accommodation, properties classified F and G. The same applies to properties presenting a lack of comfort such as poor exposure to the main room, the presence of an opposite of less than ten meters or even goods presenting a degraded electrical installation. It should be noted that this regulatory system is in addition to the annual decree which limits the annual increase in rents for re-rentals (IRL), by acting on the amount of rents 8.
New reference rents have just been published
On May 28, 2024, an order updating the reference rents of the system in force in Paris was signed. These new reference rents have applied since 1is July 2024, for properties rented in the 80 districts of the capital. These reference rents must be taken into account for lease renewals as well as for new contracts signed from 1is July 2024. Rent control applies to new signed leases (re-rentals and first rentals) and explicit lease renewals (with signature of a new lease contract). However, tacit renewals upon expiry of the lease and current leases are not affected. In the case of a re-rental or a first rental, the lessor may apply an additional rent, if justified, beyond the increased reference rent. Social housing, properties subject to the 1948 law and seasonal rentals are not subject to rent control.
Control of the City of Paris
The 3DS law of February 21, 2022 allowed the city of Paris to be delegated the responsibilities of the prefect concerning the control of compliance with increased reference rents on its territory. The other terms of the system, in particular appeals relating to the rent supplement, the absence of mention in the lease, the evolution of rents in the context of a lease renewal, remain under the responsibility of the Departmental Conciliation Commission (CDC) or the protection litigation judge. Thus, in the event of alleged non-compliance with rent ceilings after assessment via the simulator available on the Paris.fr website, a report can be made to the city of Paris using a dedicated platform. As part of a supervised procedure, since 1is January 2023, the city puts the owner, legal entity or natural person, on notice to regularize the lease and remit the overpayments to the tenant. Following an unsuccessful adversarial debate with the lessor, the city of Paris may impose a fine. In 2023, more than 1,630 reports were made after assessing non-compliance with increased reference rents on Paris.fr. The reports made are mainly located in the 11e18ethe 15the and the 20the districts. More than 80% of them are 1 and 2 pieces. Almost 500 formal notices were sent to owners during this first year based on 60% of the reports received. Around a hundred situations were resolved during the mediation phase for an estimated total amount of more than €240,000 (€2,313 on average). 7 fines were issued in 2023. On average, at the time of the formal notice, the monthly excesses observed amounted to €159 per month.
Fight against sharply increasing rents
An evaluation of the rent control system is provided for by law, which has led the Atelier Parisien d'urbanisme, in partnership with the city of Paris, to include an impact study in its work program. This econometric study was based on advertisement data from the SeLoger group and lease data from the Paris Agglomeration Rent Observatory (Olap). According to this study, rents have increased by 75% in private housing for almost 20 years in Paris. According to the latest figures published by the Paris metropolitan area rent observatory (Olap) on 1is January 2023, the average monthly rent excluding charges for private housing stock stood at €24.70/m2 for all private rental housing in Paris. It reached €18.00/m2 in the small crown and €15.00/m2 in a large crown. The average rent level was thus €1,201 per month for 50 m2 in Paris. The effects of supervision are highlighted by the study. This effect is -4.2% between July 2019 and June 2022, compared to the increase that would have occurred in the absence of supervision, i.e. €768 savings per year on average. If all landlords had respected the framework, the system would have allowed twice as much reduction in the increase in rents, with a drop of -8.2% compared to a situation without supervision. The effect tends to strengthen over time. Indeed, while it was -2.5% between mid-2019 and mid-2020, it reached -5.9% between mid-2022 and mid-2023. The effects of supervision are more marked on small dwellings. In fact, the variations in rents attributable to the supervision over the period are -10.2% for housing from 8 to 18 m². On the other hand, the capacity of the system to reduce rent amounts decreases as the surface area/number of rooms increases. However, no significant difference exists depending on whether the accommodation is furnished or unfurnished. Finally, there do not appear to be any notable differences in the impact of the supervision depending on the period of construction of the housing, according to the districts or the geographical sectors.
