Thursday, August 11, 2011

Paris threatens short-term rental apartments

The mairie of Paris has issued a warning notice about the growth in the number of small apartments and studios designed to be let to short-stay visitors, as an alternative to using a traditional hotel. The mairie estimates that there are a minimum 20,000 (and possibly up to 40,000) such properties, often located in prime central tourist areas, and their use as rental properties is exacerbating the shortgage of suitable long term accommoation available to Paris residents. Complaints have also been voiced by hoteliers concerned about the possible threat to their livelihood.

A trawl through the many websites addressed primarily to American, English and European visitors shows that even a small two-room apartment in a good location can be rented for 1000 to 1500 euros per week, or up to 6000 euros per month - with an average 60 to 100 euros per night not uncommon. Investors in rental property are not unnaturally attracted by these potential gains, which are far greater than the income that can be earned through traditional long-term renting (which in theory should be for a minimum of one year furnished and three years unfurnished).

Where there is a mix of occupants within a building, long term owners and renters compain that their lives are disrupted by the constant coming and going of short-stay visitors.

Seasonal renting is in theory controlled under article 631-7 of the Construction Code and requires an application for a change of use, and in a recent case an English owner has been fined 25,000 euros for not complying with the law. Most owners apparently claim they are unaware of the regulations.

In light of these revelations, the Paris housing authority has announced that it is currently studying the problem, and clearly any solution will have to offer a delicate balance between the undoubted popularity of short-term rentals, as an alternative to hotels (many of which have failed to keep pace in terms of modernisation and standards of comfort); the importance of nurturing the French tourist market; and finding a solution to the perennial shortage of long-term rental properties in the French capital.

Outside Paris, in the popular Mediterranean coastal areas, many studios and apartments are purchased as 'second homes' by owners with a view to securing their retirement, and rented to holidaymakers during the summer season. As a result entire buildings of fifty or more apartments can remain empty and unused during nine months of the year. The few fulltime residents (owners or renters) who choose to live there all year round and for whom it is their principal home are obliged to suffer the July/August invasion by large numbers of seasonal visitors, with the attendant disruption to their daily lives and the inevitable increased wear and tear on the building.

However, apartment owners have not had it all their own way, with an average 30% drop in seasonal rentals recorded for 2010 in Languedoc-Roussillon, and the signs are that numbers are currently down in 2011. Among the reasons cited for the decline are the unsuitability of many smaller apartments (often dating from the 1960s) for seasonal use - for example those without a balcony or terrace or not set in grounds that include facilities such as a swimming pool; the high prices demanded by owners; and the reluctance of the latter to invest in modernising and refurbishing their property. There is also increasing competition from holiday camps, many of them equivalent to small villages with a range of free attractions, supermarkets, sports areas etc, and the availability of ultra-modern self-contained chalets and villas at affordable prices.

The bad weather during July and the downturn in the French economy have also contributed to the decline in numbers - and their spending power, according to the shopkeepers and restaurateurs I have interviewed.