Rise in Unpaid Rents Sparks Urgent Calls for Regulatory Change in France
With unpaid rents averaging 3.5%, property owners urge for new regulations to protect their interests amidst rising tenancy challenges.
In France, the average rate of unpaid rents has reached approximately 3.5%, a figure that, while stable over the past year, has demonstrated a continuous increase over the last two decades.
Property owners are increasingly vocal about the need for a new regulatory framework to alleviate tensions between landlords and tenants, which they believe has been exacerbated by the current economic climate.
The situation is reflected in the experiences of many private landlords, including Éric, a small business owner who invested in a rental property in Élancourt, Yvelines, five years ago.
His intention was to generate income to supplement his retirement.
After receiving over sixty applications for tenancy, he selected a candidate who appeared financially stable, only to face unpaid rent just three months later, an issue that has persisted for over a year.
Attempts to contact the tenant have yielded no responses, leaving Éric at a loss regarding the circumstances surrounding her inability to pay.
According to recent official data, the increase in unpaid rents can be partly attributed to a mix of unexpected personal circumstances affecting some tenants, alongside a growing number of what landlords refer to as 'bad payers.' The phenomenon is prompting calls for significant reform to the current framework governing private tenancy, which many landlords feel inadequately protects their interests.
Prime Minister François Bayrou highlighted the urgency of the situation in a recent address, framing a renewed focus on stimulating rental investments as crucial to easing the existing rental market pressures.
Housing Minister Valérie Létard has echoed this sentiment, announcing the initiation of a 'flash mission' aimed at reevaluating the status of private landlords, with recommendations anticipated by 2026. This mission aims to legally recognize the economic role of private property owners, moving beyond the perspective that they are merely profiteers.
Charles Marinakis, President of Century 21 France, advocates for this reevaluation, arguing that current public policies disproportionately position landlords as adversaries to tenants.
The concept of establishing a more formalized status for private landlords is not new, with earlier proposals dating back to 2008 from the Fédération Nationale de l'Immobilier (FNAIM) aimed at simplifying and professionalizing private investments in real estate.
Proposed solutions include allowing property owners to amortize their investments, akin to practices observed in other European countries.
Such measures would enable landlords to deduct property depreciation from their taxable income, thereby alleviating some of the financial burdens inherent in maintaining rental properties, particularly in instances where tenants fail to fulfill their rental obligations.
Currently, yield rates for rental properties are reported to hover around 2% to 3.5%, which, according to Marinakis, makes investment in rental real estate less appealing compared to potential stock market returns.
He emphasizes the need for rental yields to reach approximately 5% to encourage private landlords to remain active in the housing market.
The Federation of Property Developers (FPI) has similarly pushed for revised regulations to promote secure and professional private investment within the housing sector, especially as it grapples with a near 6% decrease in sales as of 2024. For the first time in a long while, investor participation in the private rental market has declined from about 30% to roughly 25%, impacting the sector's ability to sustain adequate levels of new construction.
Sylvain Grataloup, President of the Union of Property Owners, has pointed out that criticism of private landlords overlooks their significant role in housing, as they provide accommodations for around 70% of tenants.
He notes their substantial economic contributions, including over €1.4 billion invested in renovation work and various transactional costs.
Grataloup has also proposed the elimination of the winter eviction moratorium that limits landlord actions against non-paying tenants during the colder months.
He argues that this policy incentivizes tenants to delay necessary rental payments.
He stresses that the responsibility for supporting those unable to pay rent should rest with the state, rather than the property owners.
The plight of landlords like Éric illustrates the complexities and challenges of managing rental properties amidst increasing economic pressures.
Following a recent court ruling favoring his eviction request, he faces further delays, as national laws prohibit eviction actions until after March 31 and may involve appeals from the tenant.
The potential for further complications leaves many landlords in a precarious position, anxious about the condition of their properties and the financial implications of prolonged tenant disputes.
Property owners are increasingly vocal about the need for a new regulatory framework to alleviate tensions between landlords and tenants, which they believe has been exacerbated by the current economic climate.
The situation is reflected in the experiences of many private landlords, including Éric, a small business owner who invested in a rental property in Élancourt, Yvelines, five years ago.
His intention was to generate income to supplement his retirement.
After receiving over sixty applications for tenancy, he selected a candidate who appeared financially stable, only to face unpaid rent just three months later, an issue that has persisted for over a year.
Attempts to contact the tenant have yielded no responses, leaving Éric at a loss regarding the circumstances surrounding her inability to pay.
According to recent official data, the increase in unpaid rents can be partly attributed to a mix of unexpected personal circumstances affecting some tenants, alongside a growing number of what landlords refer to as 'bad payers.' The phenomenon is prompting calls for significant reform to the current framework governing private tenancy, which many landlords feel inadequately protects their interests.
Prime Minister François Bayrou highlighted the urgency of the situation in a recent address, framing a renewed focus on stimulating rental investments as crucial to easing the existing rental market pressures.
Housing Minister Valérie Létard has echoed this sentiment, announcing the initiation of a 'flash mission' aimed at reevaluating the status of private landlords, with recommendations anticipated by 2026. This mission aims to legally recognize the economic role of private property owners, moving beyond the perspective that they are merely profiteers.
Charles Marinakis, President of Century 21 France, advocates for this reevaluation, arguing that current public policies disproportionately position landlords as adversaries to tenants.
The concept of establishing a more formalized status for private landlords is not new, with earlier proposals dating back to 2008 from the Fédération Nationale de l'Immobilier (FNAIM) aimed at simplifying and professionalizing private investments in real estate.
Proposed solutions include allowing property owners to amortize their investments, akin to practices observed in other European countries.
Such measures would enable landlords to deduct property depreciation from their taxable income, thereby alleviating some of the financial burdens inherent in maintaining rental properties, particularly in instances where tenants fail to fulfill their rental obligations.
Currently, yield rates for rental properties are reported to hover around 2% to 3.5%, which, according to Marinakis, makes investment in rental real estate less appealing compared to potential stock market returns.
He emphasizes the need for rental yields to reach approximately 5% to encourage private landlords to remain active in the housing market.
The Federation of Property Developers (FPI) has similarly pushed for revised regulations to promote secure and professional private investment within the housing sector, especially as it grapples with a near 6% decrease in sales as of 2024. For the first time in a long while, investor participation in the private rental market has declined from about 30% to roughly 25%, impacting the sector's ability to sustain adequate levels of new construction.
Sylvain Grataloup, President of the Union of Property Owners, has pointed out that criticism of private landlords overlooks their significant role in housing, as they provide accommodations for around 70% of tenants.
He notes their substantial economic contributions, including over €1.4 billion invested in renovation work and various transactional costs.
Grataloup has also proposed the elimination of the winter eviction moratorium that limits landlord actions against non-paying tenants during the colder months.
He argues that this policy incentivizes tenants to delay necessary rental payments.
He stresses that the responsibility for supporting those unable to pay rent should rest with the state, rather than the property owners.
The plight of landlords like Éric illustrates the complexities and challenges of managing rental properties amidst increasing economic pressures.
Following a recent court ruling favoring his eviction request, he faces further delays, as national laws prohibit eviction actions until after March 31 and may involve appeals from the tenant.
The potential for further complications leaves many landlords in a precarious position, anxious about the condition of their properties and the financial implications of prolonged tenant disputes.
