Tuesday, November 27, 2012

Paris - short-term rentals under threat

Owners of furnished apartments that are let out short-term to visitors and tourists are once again facing threats of prosecution by the socialist Mairie de Paris.

A recent article in the LeMonde tells the story of one such owner who, as a frequent user of furnished rental apartments on his visits to the capital, decided to invest an eye-watering 350 000 euros in a two-room apartment in the fashionable Marais district, paid for by a mortgate of 2 500 euros per month over 20 years.

Between the owner's visits the apartment was let furnished and rapidly produced an income of around 1 700 euros per week, less agency fees and charges for cleaning and changeover. All was going well until a fellow resident in the block where the apartment was located issued a complaint about noise and continual disruption caused by the comings and goings of short-term tenants, and threatened to report the situation to the Mairie.

The Paris Mairie has the unenviable task of trying to cope with the capital's perennial housing shortage and therefore discourages - and even forbids - such short term rentals, arguing that they deprive the resident population of affordable housing. Hoteliers concerned about their own livelihood have added their voice but are challenged by those anxious to encouarge tourism and offer an attractive form of accomodation that is popular with visitors to Paris - and incidentally many other European cities. Over 100 estate agencies are reported to be engaged in the short term rental business in Central Paris. There have so far been only 15 legal cases brought by the Mairie against owners.

Wherever apartments are let, particularly short term, conflicts can arise between resident owners and those who are virtually absentee landlords. This occurs in holiday areas, where second homes are left empty for 10 months of the year but can account for 70% of the local housing stock. Nationally, 10% (or 3 million) of French properties are classified as second homes, out of a total 30 million properties. Again the rental market is huge and encouraged by communes living off seasonal tourism. An active and vigilant owners syndic (management team) offers the most effective means of resolving any conflicts that may arise.

Potential buyers of property in resort areas should ideally inform themselves of current legilsation on short-term letting, local bye-laws and the policy of the building's managers.