Read news from:
Austria
SHARE
COPY LINK

RENTING

French local authorities crack down on holiday rentals

A rule coming into effect in June will force landlords in popular French holiday destinations to rent out one property on the local market for every holiday rental that they own, in an attempt to tackle the housing shortage in key areas.

Published: 22 March 2022 09:23 CET
Biarritz is a popular city for tourists from France and abroad. It will introduce strict new rules on holiday rentals from June.
Biarritz is a popular city for tourists from France and abroad. It will introduce strict new rules on holiday rentals from June. (Photo by Gaizka IROZ / AFP)

France faces an acute shortage of affordable housing. 

In the Pays Basque area of southwest of France, increasing numbers of landlords prioritise lucrative short-term holiday lets over traditional rental contracts, exacerbating the problem. 

According to the Agence d’urbanisme Atlantique et Pyrénées (Audap), the area has more than 16,000 properties let out exclusively to tourists – a figure that grew 130 percent between 2016-20. 

In response, local officials voted earlier this month to set tough new rules to curb holiday rentals and listings on platforms such as Airbnb in 24 Pays Basque communes including Biarritz, Bayonne and Saint-Jean-de-Luz. 

The following measures will come into effect on June 1st: 

  • Landlords who want to use their property for short-term holiday lettings will need to offer a second property, similar in size and in the same town, with a conventional rental contract;
  • Landlords cannot simply build another property to rent out alongside their Airbnb one – they must renovate a building that already exists and is being used for non-housing purposes (ie a garage). 

Some landlords will struggle to meet these requirements and may be forced to offer their property onto the traditional rental market instead, thereby adding to the housing supply. 

READ ALSO 5 things to know about renting out your second home in France

People renting out property in the Basque country already need to apply for a license to offer short-term holiday lettings, which are renewed every three years. Those who already have a license will need to abide by the new rules once the three-year validity period runs out. 

Landlords will still be able to rent their primary residence through platforms such as Airbnb for up to 120 days per year (as is the case in the rest of France) and offer holiday bookings in properties that are rented to students for at least 9 months of the year, without submitting to the new rules. 

Holiday rental rules elsewhere in France

  • Primary residences 

If you are absent from your property for more than 4 months of the year because of a health problem, professional reasons or because of a cas de force majeure, you can rent our your primary residence for more than 120 days of the year. 

From 2019 Airbnb and other holiday rental platforms introduced a tool that blocks postings which would allow someone to book accommodation beyond the 120-day legal limit. This measure was introduced in Aix-en-Provence, Annecy, Bordeaux, Levallois-Perret, Lille, Lyon, Martigues, Menton, Neuilly-sur-Seine, Nice, Paris, Roquebrune-Cap-Martin, Saint-Cannat, Saint-Paul-de-Vence, Sète, Villeneuve-Loubet and Versailles.

If you want to sublet a property where you are the tenant via a platform like Airbnb, this is legal for up to 120 days as long as you have the permission of the property owner. 

Many French towns require people renting property through Airbnb to register with the local town hall. 

  • Second homes 

French cities and towns with more than 200,000 inhabitants require property owners to seek an authorisation from the local town hall if they want to offer holiday rentals. 

Places with 50,000 inhabitants but which qualify as a zone tendue (as having a housing shortage) are also subject to these rules. 

In Paris, people who wish to rent their second property to tourists are obliged to follow similar ‘compensation’ rules as those being introduced in the Pays Basque – in other words, by offering one traditional rental property for every holiday property. The difference is that in Paris, it is possible to buy an existing property and rent it out – rather than renovate a garage or an office for example. 

Nice and Bordeaux also have similar compensation rules in place. 

Many French towns require people landlords renting property through Airbnb to register with the local town hall. 

READ ALSO

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

PROPERTY

Does falling interest rates in France mean more people are buying property?

Interest rates in France have finally begun to fall but has the drop sparked the French property market into life?

Published: 7 May 2024 17:03 CEST
Does falling interest rates in France mean more people are buying property?

After real estate professionals called 2023 an ‘annus horribilis’ in France, prospective home buyers have been hoping for the market to improve in 2024.

One particular issue last year was high interest rates for mortgages, coupled with strict loan requirements.

As a result, the number of mortgages granted dropped by 43.5 percent when comparing October 2023 with the same month the previous year, according to France’s Housing and Credit Observatory. 

However, those high rates have finally begun to fall, as experts thought they would.  

According to data from the Banque de France, average interest rates for new housing loans in March 2024 were at 3.94 percent, a decrease from 4.11 percent in February and 4.17 percent in January. 

However, the average rate from March was still considerably higher than that of February 2022 (just 1.1 percent). On top of that, and the rate of purchases and new mortgages are still at a low level.

France’s central bank published new data on Monday that found that despite the dropping rates, the total amount of real estate loans given out has continued to decrease. 

The total amount of money awarded to new mortgages in March amounted to €6.7 billion, down from €7.4 billion in February, marking the lowest value in almost 10 years according to Les Echos.

Why is the market still slow?

According to reporting by Les Echos, a big part of the problem is that overall real estate prices are still very high, even though they have started to decrease.

The Notaries of France found in their yearly report that property prices had gone down by an average of four percent across the country in 2023, but this picture depends a lot on location.

Large cities, such as Paris and Lyon, have seen greater decreases in the price per metre squared, while small-to-medium sized cities and rural areas have seen prices remain stable or even increase.

For example, property prices in the Paris region dropped by 6.9 percent year-on-year in February 2024, compared to a decrease of 2.9 percent which was the average for France’s other regions.

Additionally, would-be buyers still have to contend with France’s strict lending regulations.

READ MORE: French property: How to get a mortgage in France

In 2022, France’s council for financial stability (HCSF) issued new rules requiring that repayments – including insurance charges – must not exceed 35 percent of income, and borrowers must take on a loan with a maximum of 25 years, or 27 years in certain cases. 

In December 2023, French lawmakers attempted to take up this issue. They succeeded in making things slightly more flexible, including allowing banks to allow borrowers to take out a 27 year loan as long as they are having renovation work that represents at least 10 percent of the home’s cost.

The HCSF also changed some of the ways that banks can calculate interest, as well as giving them more leeway in giving loan-related exceptions (previously these exceptions could only account for the 20 percent a quarter). 

Is the government doing anything to boost the market?

In late-April, French MPs tried to table another bill that would loosen the regulations for granting loans even more, however it was eventually withdrawn after being criticised by the Banque de France for lacking substance. 

Any new changes will likely be announced during the next quarterly meeting between the Banque de France and the minister of finance, Bruno Le Maire, but the date has still not been announced yet.

READ MORE: Where in France will property taxes rise in 2024?

What do experts expect for this year?

In April, the French property site Meilleurs Agents published their predictions for 2024, based on data from the first quarter. According to their experts, average mortgage rates will likely continue to on the trend of decreasing slowly.

However, this will depend on the policies set by the European Central Bank, which considers factors such as inflation when making their recommendations.

The property site also predicted that property prices would continue to drop, while maintaining large disparities between big urban areas and rural ones. 

As for whether or not the market will speed up, the experts referenced the situation from 2023, when the number of property transactions (sales and purchases) fell by 20 percent. They predicted that there would still be a decrease in transactions, but that it would be lower than the one seen in 2023. 

SHOW COMMENTS