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Changes to letting with the new law "Duflot"


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Thanks NormanH, this is good news (I think). There is no mention of costs for the owner of the property if he/she signs into this scheme, though as I read it, they could be penalised if they are currently charging more then the agreed average? (ie no entrance to the scheme)

It will be very good if its free and they do guarantee the rent for 18 months (the time it would take to get someone out of the rented accommodation!) I presume that the owner will have to take the necessary legal action to evict during this period? One hour with the avocat cost us 300 Euros and that was 3 years ago.
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The provisions for paying for the insurance via a tax on landlords and tenants were dropped: the scheme is supposed to be being paid for out of "savings" that the state makes in its overall expenditure. I suspect that these savings are going to be spent several times over and that sooner or later a tax will be imposed to pay for the insurance and the new layer of administration that the new laws impose.

Next is the little matter of the "excess". The "insurance" will not cover the whole amount of any shortfall in rental payment - so the landlord will still be out of pocket. I read a couple of descriptions of the new system: one seemed to imply that a landlord would not be able to require payment of a deposit (so what happens if the property is damaged?) but I'm not sure about that.

Finally, the duration covered, at first sight seems reasonable (18 months) but tenants can appeal against eviction and from what I understood from a French site for landlords, it is relatively easy for a tenant to get a 3-year stay of execution on an eviction notice.

It's another disincentive to invest. Those who have had difficulties renting because of the documentation requirements of some renting agents will find this even more to be the case: owners will not want to take any risks.

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It's a mess.

1.  A landlord is now not obliged to enter the 'garantie universelle des loyers' scheme, but can still ask for caution instead.  Given the many uncertainties around the functioning of the GUL, not least its financing (see below), I suspect many will continue to do so - which will only create more confusion in the market.

2.  As Pickles pointed out, the financing of the GUL scheme is completely obscure.  Cécile Duflot has estimated the cost at 420m€, a sum which is meant to be "financé par des économies sur des dépenses actuelles de l’État, des organismes HLM et des collectivités territoriales".  Yeah, right ...

3.  On a general matter of principle, I contest the idea that relieving a tenant of his/her responsibility for not paying rent is a 'Good Thing'.

We are a long way from the original 'Bright Idea' of Mme. Duflot, namely to do something about the perceived high rents in certain French cities, notably Paris.  For reasons of political ideology and simple practicality, Mme. Duflot chose to ignore the painful truth that this situation is a consequence of the imbalance in supply and demand - for many years now, France has failed to build enuf housing to meet the needs of its increasing, and increasingly urbanised, population. 

And this law will, as Pickles points out, only exacerbate this situation by limiting the amount of private investment in new housing.  Which is already happening.  I quote:

«En 2014, nos ventes de logements devraient baisser de 10 à 12%, affirme François Payelle, président de la FPI (Fédération des promoteurs immobiliers). Elles oscilleront donc entre 65.500 et 67.500 unités. On n'était jamais descendu aussi bas depuis 1995; mais à l'époque, la France comptait 56 millions d'habitants contre 67 millions aujourd'hui.»

Source: http://www.lefigaro.fr/immobilier/2014/02/13/05002-20140213ARTFIG00188-logement-neufs-les-ventes-plongent-encore.php

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If a rent is considered too high, the tenant may appeal to the local commune who can reduce it. Which probably means that there will be hundreds of appeals by tenants. In fact, surely tenants will appeal on principle.

A left-wing council might feel obliged to lower rents, which will cause landlords to withdraw from the rental market in the long run, thus exacerbating the problem of housing shortages.

I understood that the money from the Livret A was used to pay for social housing; given the amount of money in this savings account, why isn't it being spent or is the problem so big that it is a mere drop in the ocean?
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[quote user="woolybanana"]If a rent is considered too high, the tenant may appeal to the local commune who can reduce it. [/quote]

Careful here, Wooly.

1.  The rent control provision only applies in 'les zones tendues'*, not everywhere.

2.  And the level of rent is established by the préfet, not the commune.

But what IS unclear is just how the préfet will set this loyer médian de référence.  Now, while the law provides for the establishment of un observatoire local des loyers to provide the information needed, it seems that this information will include the rents operating in the state, i.e, the subsidised, sector - not just the private market.  So that raises the question of how to reconcile a private sector rental of say, 300 euros against a subsidised rental for similar accommodation at 150 euros.  I think you can see the problem ....

All Mme Duflot has said at the moment is that:

" Une instruction sera adressée aux préfets de région au cours du premier semestre 2014 pour généraliser ce dispositif aux 28 agglomérations concernées par l’encadrement des loyers."

Like I said earlier; it's a mess ...

* Currently:

 "28 agglomérations de plus de 50 000 habitants où il existe un déséquilibre marqué entre l'offre et la demande de logements (et qui sont à ce titre soumises à la taxe sur les logements vacants) : Ajaccio, Annecy, Arles, Bastia, Bayonne, Beauvais, Bordeaux, Draguignan, Fréjus, Genève-Annemasse, Grenoble, La Rochelle, La Teste-de-Buch – Arcachon, Lille, Lyon, Marseille – Aix-en-Provence, Meaux, Menton – Monaco, Montpellier, Nantes, Nice, Paris, Saint-Nazaire, Sète, Strasbourg, Thonon-les-Bains, Toulon, Toulouse.  Un décret fixera la liste des communes comprises dans ces zones."

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