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PROPERTY

Paris landlords still charging illegally high rents

Many Paris landlords are charging far too much rent for their flats, according to a study published on Tuesday. Some Parisians are paying hundreds of euros too much for their pokey flats.

Paris landlords still charging illegally high rents
Photo: Panoramas/Flickr
Even though a rent-capping law was rolled out last year, Parisians still getting stung by greedy landlords – and often. 
 
New figures courtesy of the CLCV housing association, which looked at 800 online apartment ads, have revealed that many landlords and even agencies are still advertising their properties at illegally high rent prices.
 
The survey looked at adverts on eight of the most popular home renting websites: seloger.com, fnaim.fr, leboncoin.fr, pap.fr, nexity.fr, foncia.com, orpi.com and century21.fr.
 
The apartments were a split between furnished and unfurnished flats that were either offered privately or through an agency. 
 
And as it turns out, it's the landlords advertising independently that are most likely to be ripping you off. 
 
Indeed, while 25 percent of agency adverts have rent prices above maximum rental regulations, the figure rises to 51 percent for adverts placed by landlords independently.
 
The study noted that rents exceeding the maximum, on average, were too expensive by €115.39 a month. 
 
And if you're living in a smaller spot – especially a maid's room (a chambre de bonne in French), then you're the most likely to be taken for a ride. 
 
Some 46 percent of these smaller rooms are being rented for too much money, while only 12 percent of four-room flats are priced unfairly. 
 
“And it's mainly young people and students who are the tenants in these smaller places, a relatively fragile group economoically,” the CLCV noted in its report. 
 
As an example, it pointed to a 21m2 apartment in the 18th that was being offered for €1,040, noting that it shouldn't cost more than €665. That's a difference of €375 a month or €4,500 a year.
 
 
Are you paying too much to rent in France? Find outParis rooftops. Photo: Maree Turner/Flickr
 
Renters can take small comfort in the fact that the figures are improving when compared to last year.
 
In 2015, 70 percent of agencies were following renting rules and 47 percent of private landlords. 
 
“While the situation is slightly better than in 2015, it's still not satisfactory,” the CLCV noted. 
 
It requested sanctions against landlords not respecting the rules, and a wider rollout of the rental cap scheme to other areas affected by high rents. 

It also suggested that rental agencies should flat out refuse to list an apartment if the owner is looking for too much money. 
 
The rent-capping Loi Alur was rolled out last August as a part of a sweeping housing reform by the current government. 
 
It came as part of a bid to control rental prices in the capital, which have spiraled upwards by 42 percent over the last ten years. 
 
The reform meant Paris rent prices are now measured in euros per square metre and based on the building's age and location.  
 
Under the rules no new rental contract could charge more than 20 percent per square meter above the neighborhood’s median rent, which is assessed annually by a “local rent observatory”.
 

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PROPERTY

French property: What is buying ‘en tontine’?

If you're buying property in France, you might be thinking about buying 'en tontine' - this has advantages especially when it comes to France's strict inheritance laws, but can also have tax implications.

French property: What is buying 'en tontine'?

What is it?

The ‘clause de tontine’ sometimes also known as a ‘clause d’accroissement’ is a clause that is inserted into the property deeds when you are buying a house or apartment.

It can only be inserted during the purchase, and cannot be added later.

It’s basically a ‘group purchase’. It’s most commonly used by unmarried couples who are buying together but it can be used by larger groups too – for example a group of friends buying a holiday home together.

You will have to ask a notaire to draw up the tontine clause during the property purchase and it can only be used if 

  • the parties are equally involved in the financing of the purchase
  • the parties involved have a roughly equal life expectancy (for this reason tontine clauses may be rejected if there is a significant difference in age between the purchasers)

What’s the point of it?

The main reason that people use it is to sidestep France’s strict inheritance laws, which assign that a certain portion of every estate must go to children, at the expense of a partner. 

READ ALSO How France’s strict inheritance laws work

For this reason it is particularly used by couples who have children from previous relationships.

On a property with a tontine clause in effect, when one owner dies their share of the property passes in its entirely to the other member/members of the tontine.

This cuts out children from inheritance, but means that a surviving partner is not evicted from their home in favour of the children of the deceased. 

It also has the advantage of making the intentions of the deceased clear, to avoid arguments among heirs after their death.

It should be noted, however, that the tontine clause only takes in the property that it covers – other assets may be subject to French inheritance law so it’s therefore probably wise to arrange a will, to ensure your wishes for your estate are met.

The surviving party can ask a notaire to update the property deeds to show that they are the sole owner, if they want. Be aware there will be a fee, which could reach four figures for the privilege – and it doesn’t actually involve any change to the property title.

Drawbacks

The advantages of the system are clear, especially for blended families, but there are some potential drawbacks too, which mean that anyone considering buying in this way would be well advised to take proper legal advice before they start.

Inheritance tax – while a tontine will help you to avoid restrictions on inheritance, it does not exempt you from inheritance tax. French inheritance tax is structured according to your relationship to the deceased, and people who are neither married nor related to the deceased pay an eye-watering inheritance tax rate of 60 percent.

The only exception to this top rate of inheritance tax is if the property is your main residence and it is valued at under €76,000 – in that case, tax is paid at a rate of 5.8 percent.

Married couples and family members pay a much lower rate or not tax, but if you’re not married to your tontine co-purchaser, be careful that you’re not lining yourself up for a massive tax bill in future years.

Wealth tax – depending on the value of the property, it could tip you over into the ‘wealth tax’ category when you inherit. France’s wealth tax is a real estate based tax and is levied on anyone who has real estate assets (property and land) worth €1.3 million or more.

The calculation includes property held en tontine.

Tax savings – you might hear tontines being advised as a way to limit your French tax liability.

While this used to be true, changes to tax laws means there are no no significant tax advantages to buying this way – the same is true for buying a property via an SCI, which used to represent a tax saving until the law was tightened up.

Disinheriting family membersOne side effect of the tontine clause on mixed families is to effectively disinherit any children of the first person to die.

Because the property passed to the survivor, under French law, only their direct descendants – rather than any family by marriage – are entitled to automatic inheritance.

That means that the children of the surviving partner will be entitled to the statutory share of the entire asset (between 25 and 30 percent depending on the number of children), but the children of the first person to die will be entitled to nothing. Obviously you can choose to leave them something in your will, but you can only leave them some or all of the estate which is not automatically given to the children on the survivor.

Divorce/dispute – if the members of the tontine split up or (in the case of friends) fall out, then they can either sell the whole property or agree to buy each other out.

However, if one party refuses to sell, then you have very limited legal options – unlike a standard property purchase a tontine is not regarded as joint ownership, so one partner cannot be forced to sell as part of a divorce procedings, for example.

Basically the tontine can only be ended or changed with the agreement of all parties – so if you can’t agree between yourselves then you may be stuck with it.

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