As long as housing is located in a tense area, the increase in rents remains strictly regulated by legislation. Therefore, you must take it into account, which is not the case outside of these tense areas.
How does the rent increase work when a property is located in a tense area?
You are the owner of real estate located in a tense area. Your current tenant has given you notice and you have just found another person interested in renting your property. For your part, you are looking for the best profitability and you are considering the possibility of increasing the rent. However, you will not be able to act as you wish, because setting a rent requires taking into account a set of elements. As part of a property in the French capital, you include the reference rent in Paris.
Based on this element, you know the rental price of your apartment for compliance with legislation, assuming that the rental lease is established on a higher basis than the amount of the previous tenant's rent. . However, remember to take the benchmark rent index into account, but only when there has been no increase in the last 12 months. Otherwise, you take into account the latest index published by the Île-de-France prefecture and generally the prefecture on which your property depends.
However, please note that you are not affected by these restrictive measures, because rent control will not apply outside of tense areas. Do not forget to respect the specific rules of rental by indicating precisely the amount of the previous rent that you applied to your last tenant.
Are there any exceptions?
Generally speaking, it is impossible to circumvent rent control. However, the legislation incorporates various very specific cases. For example, you have carried out significant work to bring your property into compliance or as part of an improvement. The work was carried out between the signing of the lease of the previous tenant and the new one. The amount committed corresponds to a minimum of 50% of the total amount of rent collected during the calendar year. In such a case, an increase is then possible with an amount corresponding to 15% of the cost of the work.
Under the same conditions, you carried out work, but this time with an amount equivalent to an entire year's rental over the last six months. As a result, you benefit from a free increase, provided you take into account the increased reference rent when the city is affected by this legislative measure.
In the context of an undervalued rent, a revaluation is also provided for by the legislation, within the limit of 50% of the difference between the average of similar accommodation and the last rent. Finally, a new rule is added to take into account the primary energy consumption of the property. When the latter does not exceed the ceiling of 331 kWh per square meter per year, the increase is then possible.
How to calculate the new rent?
To combat rising rents, rent controls have been put in place. For your part, you work with a new tenant and therefore you put in place a new rental lease. As explained previously, the amount of the new rent cannot exceed the amount of the last rent paid by the previous tenant. The revision is always carried out according to indexing. But this process is not always possible when the rent review was carried out during the last 12 months preceding the implementation of the new rental contract.
To avoid confusion, apply exactly the same rent as before. As part of a rental lease which was signed on June 1, 2022. At that time, the rent was €1,000 and the property is located in a tense area. The tenant has decided to leave at the end of this same year, that is to say in December 2022. The owner immediately proceeds to rent the property and sets up a contract on the date of August 1, 2023. Obviously , rent pricing is not done randomly, but according to indexation, of the order of 3.5%. A specific rule, because the property has not been indexed in the last 12 months. As a result, the amount of the new rent will be €1,035.
How to determine the amount of rent when it is undervalued?
Based on neighborhood references, the owner must provide the necessary proof that the amount of the rent is not in line with market reality. If this is the case, an increase is possible between the previous and the new tenant. However, it remains regulated and determined at 50% of the difference between the two rents.
This is a theoretical regulation, because in reality it remains particularly complex. Let's imagine that the amount of the previous rent was set at €1,000. The owner manages to prove that this amount is not realistic, because the neighborhood rents for €1,200. As a result, you see a difference of €200 with the application of the legislation, which gives an increase of €100. Thus, the amount of the new rent will be €1,100.
As a landlord, you may be confused by the many rules governing rent. Even if you are tempted to increase it after your tenant leaves, you cannot do as you wish. Rather than making a mistake by exposing yourself to a particularly substantial fine, consider the possibility of working with a knowledgeable professional. It’s a way to receive sound advice and move forward with more peace of mind on your real estate project.