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Are you paying too much to rent in France? Find out

Rental caps have been rolled out in Paris, but the rest of the country isn't obliged to play along yet. Here's what you can do, however, if you're paying too much.

Are you paying too much to rent in France? Find out
Paris rooftops. Photo: Maree Turner/Flickr
Since August last year, Parisian landlords have had to play along with the rent-capping Loi Alur (or Loi Duflot as it was called) which was rolled out 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”.
 
So for example if you live in a 30 square metre one-bedroom apartment around Pére Lachaise in Paris, the maximum rent should in theory be €729 per month.  
 
Up to now however the law has only been applied in Paris, even though a number of designated “strained” zones were identified across the country including cities like Lyon, Marseille and Montpellier, where renters faced the same issues as in Paris – crazily high prices and a lack of flats available.
 
So while the Paris rent system is in the process of being controlled, thousands if not millions of renters across the country are potentially suffering from overpriced homes and apartments, because their local mayors are choosing not to implement it.
 
But perhaps not for long. 
 
France's consumer rights organisation CLCV has launched a site called “My rent is too high” (Mon loyer trop cher) where renters from all cities can check in to see if they're being ripped off. 
 
After entering your details – providing you live in one of the 1,151 municipalities around the 28 cities in France where the law is supposed to apply – you can learn whether you are indeed paying too much.
 
If so, you are encouraged to send the information along to your local mayor or MP with just one extra click. 
 
The rights group says it created the system as part of a bid to “mobilize the public” and to “limit the abuse” from landlords around France. 
 
It said that it was “disturbing” to see that so many households are struggling to purchase homes after spending so much on rent, adding that some renters are overpaying by more than €100 a month. 
 
Meanwhile, the rental caps have irked real estate agents and landlords' associations, which have promised to wage legal battles with legal officials choosing to roll out the changes. 
 
That's despite landlords benefiting from certain measures in the reform like a state-run insurance scheme that covers them if tenants don't pay their rent.
 
If you want to find out if you're paying too much, check out the Mon loyer trop cher site here

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PROPERTY

Why buying property in Austria remains unaffordable for most

Buying a home in Austria is a dream for many international residents, but it remains out of reach for the average earner.

Why buying property in Austria remains unaffordable for most

Many people living in Austria dream of one day owning a home, but despite recent drops in property prices and interest rates, this dream is still out of reach for many average earners. 

In Austria, it is recommended to not spend more than 40 percent of a monthly income on debt repayment.

But new analysis by tariff comparison portal durchblicker.at reveals that even a double-income household would need to spend around 60 percent of their income to afford a 90m² new-build apartment in Vienna.

While the government has created initiatives to improve the affordability, with attractive housing packages, fee reductions and eliminations of certain fees, such as the “Grundbucheintragsgebühr” (land register entry fee) and “Pfandrechtseintragungsgebühr” (mortgage registration fee) for properties up to a certain value, their impact has been limited.

Furthermore, the governments initiatives often overlook the specific needs of lower-income households and may benefit those who are already financially stable, leaving the average earner still struggling to afford a home, according to Der Standard.

READ ALSO: ‘Haushaltsversicherung’ – How does Austria’s home insurance work?

High prices, rates and strict lending criteria

One of the biggest barriers to owning a home in Austria is simply the sky-high property prices. Over the years, property prices have increased, making it more difficult for people with an average income to afford a place of their own. Even with recent minor dips in prices, they still remain high.

Another factor making owning a home challenging is the increase in interest rates in recent years. As a result, both existing variable-rate loans and newly obtained fixed-rate loans have become more expensive. Analysts expect the European Central Bank to cut interest rates by around 0.5 percent in the near future, but according to durchblicker’s calculations, this would initially only create a little relief for loan takers, where instead of around 60 percent, 55 percent of monthly household net income would be needed for debt repayment.

Another issue preventing many from realising their dream to buy a home is the difficulty in obtaining a mortgage. Since July 2022, stricter rules have applied in Austria for the granting of property loans. Loan applicants must have a deposit worth at least 20 percent of the value of their property to be granted a loan, according to the financial online platform Finanz.at. This means that even applicants with higher incomes may struggle to get their dream financed. 

Furthermore, many loan takers with variable-rate loans, especially those recently obtained, are facing significant challenges. The variable interest rates have increased significantly since the initiation of these loans, resulting in higher monthly repayments, reported Der Standard.

Few people can afford their own home in Austria, especially in Vienna. Photo by Christian Lendl on Unsplash

Experts suggests fixed rate loans and cooperative housing models

Andreas Ederer, Head of Banking at durchblicker.at, recommends loan takers with variable-rate loans to change to fixed-rate loans. He suggests that fixed-rate loans have become more attractive as they are currently cheaper than variable-rate loans, reported Kurier

Unlike fixed-rate loans, which have a steady interest rate throughout the loan term, variable-rate loans can change over time in response to shifts in market conditions or the economy.

Experts also suggest alternative models for increasing affordability. One idea is to create more opportunities for cooperative ownership with mandatory purchase options. This could offer a more affordable option where costs such as maintenance and taxes are shared. According to Der Standard, cooperatives also often have access to loans with better terms.

READ NEXT: How can I move into affordable cooperative housing in Vienna?

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