Monday, March 27, 2017

French furnished lettings - security for both owner and tenant

French furnished lettings provide a measure of security both for the owner of the property and the tenant/occupier, following a tightening of the rules in the loi Alur of March 2014, promoted by the then housing minister Cecile Duflot.

Many are based on the regulations concerning unfurnished properties but offer a briefer period of tenure - 12 months renewable, reduced to 9 months in the case of a term-time student lettings - with the option to renew the tenancy and the right of the tenant to leave the property at any time at 4 weels notice.

On signing the tenancy agreement, the owner can ask for a security deposit of two months' rent (note that the maximum for unfurnished tenancies is just one month) and other provisions using a standard contract which will include an inventory of the contents. In order for a property to be classified as 'furnished' certain basic items must be provided by the owner, including means of eating, sleeping, heating etc and listed on a standard form which will become part of the lease and agreed between the parties.

If the owner wishes to give notice to the tenant, he can justify this only on restricted grounds,such as non-payment of rent or serious misuse, or his intention to occupy the property for his own use or in order to sell it.

How much to charge? It is possible for anyone with disposable capital to buy a property which has a tenant already in place (either furnished or unfurnished) so the rent will be known. The short-term furnished market is fairly competitive, offering a wide range of choice for a prospective tenant who will normally be well informed about going rates in the locality - from agency websites and informally from friends and colleagues. In some areas, including Paris, rents can be controlled by the local authority under new regulations (2016, 2017) designed to prevent price inflation where there is a known shortgage of available properties. Universities and other institutions may also have their own rules should a property owner wish to have his property added to their housing list.

Short term renters, according to the experts*, often have a different profile from long-termers and owner/occupiers, They may be younger, prepared to live in a small space (say, 20 square metres) on higher floors with no lift, and in cental/mixed areas that might not attract long stayers but which offer quick access to public transport, local shopping and other basic amenities, And if the property is well furnished and decorated and offers something a bit special renters may be prepared to pay an above-average rent.

Furnished lets by their nature mean a higher turnover of occupants than with unfurnished properties, and will need to be constantly refreshed and furniture  replaced. It may be possible to let them on a very short basis as holiday lets (such as through AirBnb) in popular tourist areas. In the case of 9-month student let, a two to three month summer rental might be possible - if the property is large enought for at least two people. If not, you could try attracting a seasonal worker. All these options require hands-on management in order to succeed.

* "Comment je suis devenue rentière" by Elise Franck describes in detail how she became the owner of several short-term rental properties, with numerous tips, illustrations and cost breakdowns. Essential reading, along with her website which cotains a lot of useful advice including before and after illustrations and examples of successful renovations.

Posted by peterdanton@orange.fr