Future changes in French rental laws

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Future Changes in French Rental Laws (as of December 2024)

France is set to implement significant changes to its rental laws, particularly targeting short-term rentals, starting January 1, 2025. These changes are part of a broader effort to address housing shortages and ensure that residential properties are used primarily for long-term housing rather than short-term tourist accommodations. Here are the key changes and their implications:

1. Reduced Tax Benefits

Non-Classified Rentals: The tax deduction for non-classified short-term holiday rentals will be reduced from 50% to 30%, with a cap on annual rental income set at €15,000.
Classified Rentals: The tax allowance for furnished tourist accommodation will be slashed from 71% to 50%, with the income cap reduced to €77,700.

2. Shorter Rental Limits

Primary Residences: Properties can only be rented out for a maximum of 90 days per year, down from the current limit of 120 days.
Municipal Quotas: Local authorities can set quotas for the number of short-term rentals allowed in specific areas and designate zones reserved for primary residences.

3. Energy Efficiency Requirements

DPE Ratings: Properties must achieve at least an ‘F’ rating by 2025, with a commitment to achieve a rating between ‘A’ and ‘D’ by 2034. Properties rated ‘G’ will be banned from rental starting in 2025.
Compliance Deadlines: Owners have ten years to comply with the energy efficiency requirements under the 2021 Climate and Resilience Act.

4. Registration and Documentation

National Online Service: All short-term rental listings must be registered with a mandatory national online service. Owners must provide their tax notice and the full address of the property being rented out.
Co-Ownership Declarations: Co-owners of tourist rentals must declare their position with the local municipality starting in 2025.

5. Fines and Penalties

Administrative Penalties: Owners who fail to comply with energy performance requirements may face fines of up to €5,000 per property. Mayors can request a valid DPE at any time, and owners have two months to comply or face an administrative penalty of €100 per day.
Unregistered Rentals: Fines of up to €10,000 will be issued for unregistered tourist rentals, and up to €20,000 for those who falsely declare registration or use a fake registration number.

6. Local Authority Powers

Quotas and Zoning: Municipalities can set quotas for short-term rentals and designate areas where only primary residences can be constructed.
Enforcement Tools: Mayors will have additional powers to enforce these regulations, including the ability to issue fines and penalties for non-compliance.

7. Impact on the Market

Reduced Supply: The stricter regulations are expected to reduce the number of available short-term rental properties, particularly in urban centers, potentially driving up prices for tourists.
Shift to Premium Rentals: Wealthier owners who can meet compliance requirements may dominate the market, focusing on high-end accommodations less impacted by these rules.
Increased Long-Term Rentals: Property owners unable or unwilling to comply with the new rules may pivot to long-term leases, alleviating some pressure on the housing market.

These changes represent a significant shift in how short-term rentals will operate in France, aiming to balance the needs of tourists with those of local residents and address the housing crisis in urban areas.