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Service France
Important Note. The information given here is for information only and is of a general nature and is not exhaustive or comprehensive. Law is a technical and complex area and you should not act or refrain from acting without comprehensive specialist advice on the facts of your case. This article does not constitute investment advice.
This article outlines the law relating to residential tenancies in France which is markedly different to that in England. It does not deal with the taxation in France which draws a distinction between renting furnished and unfurnished – broadly unfurnished is taxed as “Revenus foncier” and furnished property is taxed under “BIC”. There is an important legal difference between furnished and unfurnished lettings in France each of which is governed by a separate law giving tenants and landlords different rights. There is also a difference depending on whether you own the property in your own name or that of a company – company landlords are worse off than individuals owning property in their own name. For these purposes an SCI is viewed as a company which is an important consideration seldom pointed out by notaries and other advisers recommending the use of an SCI. These distinctions are normally not important in English residential lettings which are generally more favourable to landlords.
If you rent out a furnished property the lease must be for at least one year though it is possible to agree a longer period. The lease is automatically renewed at the expiry of the agreed term for a one-year period even if the initial lease has been drawn up for more than one year. It does not matter whether the landlord is an individual or a company the same rules apply.
If you rent out an unfurnished property the lease must be for a minimum period of 6 years if you own the property through a company, and for a minimum of 3 years if you own the property in your own name. The tenant has an automatic right of renewal for either 6 years or 3 years depending on whether the property is owned by a company or an individual.
French law provides strict rules to terminate a lease. If the tenant wants to leave the property, he has to give 3 months notice for an unfurnished property and 1 months notice for a furnished one. Tenants can decide to terminate the lease whenever they want and are not obliged to continue paying rent for the duration of the lease as is the English position. Landlords cannot terminate the lease at an earlier date than that set by the law – see above.
Landlords wishing to terminate a lease must give notice to the tenant that they do not intend to renew it. You must give 6 months notice for unfurnished property or 3 months notice for furnished property. Landlords can only refuse a renewal of the lease if they wish to sell the accommodation, if there is a “serious and legitimate reason” e.g. persistent non payment of rent or damage to the property, or if they want to take the property back for their personal use. The latter does not apply if the landlord is a company. Landlords also need to be aware that if they give notice to sell the property the tenant has a right of pre-emption to buy the property at the sale price the landlord accepts from a third party. In other words tenants have a right of first refusal.
If a tenant remains in the premises, despite notice having been given by the landlord, he can only be evicted following a legal judgment stating that he has no right of occupation, and granting the bailiffs or police the right to evict the occupant. This type of procedure is generally long.
Finally, you have to be aware that there is no freely negotiated rent increases as in the UK. The rent can only be increased annually, in accordance with the “IRL”, an Index published by the National Institute for Statistics and Economic Affairs. Rents are pegged in this way on an annual basis.
David Anderson
12th July 2007