Rental cap introduced in paris

Photo credit: Christine â„¢

Paris has become the latest European city to introduce a rent cap. The new law will limit rental increases for any leases signed after 1st August, a controversial rule that has caused uproar among agents and landlords.

The measure was promised by President François Hollande back in 2012 as part of his campaign, before being provisionally passed in March 2014. Now, the regulations have officially come into force, which will restrict rents to no more than 20 per cent higher or 30 per cent below the median rate for the local market.

Anne Hidalgo, the socialist mayor of the capital, has welcomed the reform. Indeed, tenants have seen rates climb 42 per cent in the past 10 years.

But professionals are less keen, warning that the market could become significantly less attractive for investors.

Jean-Francois Buet, chairman of FNAIM, warns: "The problem is that in Paris, 60% of residents are tenants. [It] has a crucial need for private landlords."

Fabrice Abraham, head of property agency Guy Hoquet, tells the Financial Times: "If the town hall wants to entice investors to come to the city, this isn’t the way to do it."

Other cities are also planning to introduce the rules, with the mayor of Lille already noting interest.

The measures follow the implementation of a similar cap in Berlin, Germany. With rents already showing signs of decreasing, the UK has seen heated debates about whether a limit could also be placed in London, where rents are continuing to climb.

Letting agents and landlords have both reacted strongly against the idea.