Need to know: La Loi Alur

As of 27 March 2014, the Alur Law has been passed by the French government. Below is a summary of the changes to the legislation that may affect building and home owners.

Charges:

• For lease furnished and residence , the owner may opt for a flat charge or a provision on costs. Warning! The specification must be established on the basis of the list of rental charges.
• This package charge will be reviewed annually under the same conditions as rent, i.e. based on annual change in the IRL.

Deposit:

• For the principal residence, the deposit is two months rent excluding charges. However, if the owner wants to be paid in advance, or for a period exceeding two months (quarterly, for example), they will not ask for deposit.
• The deadline for return of the deposit remaining is two months. However, this period shall be reduced to one month if no difference between the state on entering the property and inventory is observed.
• If the owner does not make the deposit within the prescribed period, the amount of the deposit due to the tenant will be increased by an amount equal to 10% of the monthly rent for each month of delay began.

Revaluation of rent:

The revaluation of rent based on the IRL can only be retroactive one year. It was previously retroactive five years.

Condition:

The tenant now has the opportunity to complete the inventory during the ten days of the signing of this inventory.

Small areas:

If the leased property is an area not exceeding 14 m2 and rent, utilities included, exceeds €40.88 per M2, the lessor is liable for the “annual tax on rents”.

Lease types:

• The lease shall be established in accordance with a standard contract that will include the amount of rent referenced in the area where the unit is located and the amount of rent paid by the last tenant.
• An equipment list will specify the elements to allow the tenant to sleep there, eat and live properly in relation to the demands of everyday life.

The contract type and standard inventory will be defined later by decree.

Rent control:

In large cities, median rents remain undefined.

Notwithstanding 1: Owners whose property has exceptional characteristics or high-end equipment can uncap rent controls for this purpose.

Notwithstanding 2: When the leased property is the principal residence of the lessor (that is to say, it is occupied more than 8 months per year), it is not necessary to seek permission for change of use or permission of the condominium. These rentals will not have a cap on rents, even when they are in large cities.

Diagnostics:

Three diagnoses to be provided today – energetic performance, lead, and for the areas concerned, condition of natural and technological risks – an asbestos diagnosis and a state of the domestic gas installation and electricity will be added.

Rental fee:

Owners using the services of property professionals to rent the apartment must bear the fees the rental of their property.

However, the fees relating to the drafting of the lease, the organization of the visit, the establishment of the record of the tenant and the completion of the inventory will be shared equally.

Please note: The fees to be deducted from rental income are provided tax system is “real” and not “micro BIC” regime.

Universal Warranty Rents (GUL):

Scheduled to go into effect for leases from 1 January 2016, the LUG is free for the owner; however, it will be funded by the taxpayer to the tune of 400 million euros a year, said the Ministry of Housing.

Support is unpaid only cover for approximately 18 months after franchise per month, but the LUG does not cover the risk of vacancy or degradation. Rents will be compensated to the tune of rent reference sector.

Please note: the owner will not have to take the LUG, but if they don’t, it must expressly mention in the lease, by checking a box provided for this purpose. In this case, the owner may request a deposit from the tenant.

Waiver: The sum of the LUG and the bond shall stand, unless the occupant is a student or an apprentice.