The French experimentation with the framing of rents in tense urban contexts : the development of rent data

International audienceIn the case of residential leases, rents are in principle freely fixed. However, in order to improve access to housing and social mix in tense urban areas, by acting on excessive rents and containing the increase in abusive rents observed in these areas, and thus preserving the purchasing power of the French population, the French legislator intervened, on the occasion of Law n° 2014-366 of 24 March 2014 on access to housing and renewed urban planning, in order to regulate rents. More precisely, it concerns municipalities included in areas of continuous urbanisation of more than 50,000 inhabitants where there is a significant unbalance between housing supply and demand, leading to serious difficulties in access to housing throughout the residential park. Under Decree No 2017-1198 of 27 July 2017, these municipalities are those included in the list annexed to Decree No 2013-392 of 10 May 2013, i.e. the municipalities subject to the annual tax on vacant housing. In tense areas, the prefect shall set each year, by decision, on the basis of data provided by the local rent observatory, a reference rent, an increased reference rent and a reduced reference rent, expressed by a price per m² of living space, by housing category and by the geographical sector. Article 17-I of the Law of 6 July 1989 provides that the increased reference rent may not be set at an amount 20 % higher than the reference rent, while the reduced reference rent may not be set at an amount higher than the reference rent less 30 %. On the basis of these rules, it is intended that the initial rent will be capped at the increased reference rent. The measure was tested in Lille and Paris, but the prefectoral decisions were contested and finally cancelled, which called into question the frameworks that had been planned. At issue was the scope of the decrees, which concerned only certain areas of the municipalities and not the municipalities themselves, a distinction that was not considered in conformity with the 2014 law by the administrative tribunals and then by the courts of the second degree. The french legislator then intervened again on the topic, during the recent law n° 2018-1021 of 23 november 2018 on the evolution of housing, development and digital technology, known as the ELAN law.The rent framework applies both to leases regulated by law n° 89-462 of 6 July 1989, i.e. contracts concerning the rental of the main residence (more than 8 months in the residence under the terms of article 1 of the 1989 law), and to new mobility leases (leases of less than one year granted). Thus, all these contracts must include the amount of the rent, its payment terms and conditions, as well as any adjustment rules, the reference rent and the increased reference rent, corresponding to the category of housing and defined by the prefect in the tense areas referred to in article 17, I of the law. However, the law does not apply to short-term leases, such as Airbnb, which made it a contested system from the beginning and still does today. The Economic Analysis Council, attached to the Prime Minister, had already indicated in the ALUR law that, given the risks of inefficiency in the private rental park, it was necessary to experiment with pilot areas before the system became general. This is the approach that the legislator took in 2018. The system now proposed secures the possibility of experimenting with rent control in sectors within an area. The legislator is pragmatic because, within the same zone, different realities can coexist (Illustration during the presentation).I- A framework conditional on a reliable data collection systemRent framing implies a reliable system for collecting rent data. The French system is not complete, but is being built step by step. As the Court of Auditors points out in its 2016 report, "the process initiated since 2012, even if not yet completed, appears to be rich and deserves to be resolutely pursued.../.... Everything must therefore be done to preserve this dynamic and ensure the sustainability of the observatories already created or planned".II- A framework conditional on an effective system of sanctionsDespite an existing corrective mechanism, the Lille and Paris experiences have shown the gap that can exist between expected and actual effectiveness