Guide to renting out property in Paris
Both the capital city and the most populous city in France, property for sale in Paris is especially sought-after and owning a property here can prove to be a lucrative rental investment.
Despite the pandemic and the slight rise in interest rates which has been witnessed in recent months, French mortgage rates remain extremely competitive when compared to the UK and Parisian property still represents a safe long-term investment. Owning a rental property in Paris has various economic, touristic and cultural advantages, which explains why prices are so high in the capital and why buying a property in Paris is generally perceived as a safe investment.
Why invest in rental property in Paris?
First of all, there is a strong demand for both short-term and long-term rentals in the capital. With young professionals, students and tourists always looking for apartments to rent, there is certainly no shortage of potential tenants in Paris! This gives property owners the opportunity to choose the best possible tenant to ensure that their property is kept in good condition whilst it is rented out.
The City of Lights is attractive on so many levels that there is always a natural demand for rental properties here. A globally recognised city, thanks to its perfect mix of economic dynamism and cultural influence, Paris welcomes more and more residents every year, 62% of whom are tenants.
Finally, when buying a property in Paris, investors can almost always expect to sell the property for a higher price in the future. The entry ticket to the Parisian real estate market has increased gradually in recent years and, according to Seloger, there are only five Parisian districts where prices have not yet passed the €10,000/ sqm bar. After the number of transactions was at its lowest during the lockdown period, the real estate market has recorded an increase of 7.7% since the resumption of activities. After the lockdown, 60% of offers were made at the asking price compared to just 50% last year. 25% of buyers even registered their interest in a property faster. Therefore, individuals looking to sell their apartments in the future are likely to see capital appreciation as Paris always bounces back after a major crisis.
There are several ways to rent out your property in Paris and multiple agreements and regulations for each rental method. We closely examine the pros and cons of each rental term in the sections below.
Long-term rentals in Paris
Despite the implementation of the ELAN law, voted at the end of 2018 and revisited in July 2019, placing once again a cap on rental prices, long-term rentals remain the easiest and most common rental method for French and international investors.
As 62% of Paris residents are renters, potential tenants are readily available and investors can handpick who they rent their property to, choosing trustworthy tenants who will keep the property in good condition. Average long-term rental yields in Paris are around 3%.
Now regulated, the reference figures for rents are available on the Paris Prefecture website. Whilst rents are capped, it is still possible to apply additional fees if an apartment offers certain features:
“An additional rental fee may be applied to properties which have an exceptional location or offer exceptional comfort features when compared to other properties within the same category and located within the same geographical area."
Article 140 of the Elan Law
The additional rental fee must be justified by the property having an exceptional element when compared to similar properties in the area. For properties to be considered similar, they should not only have similar characteristics and construction dates but they will also need to be rented out with the same level of furnishing (furnished or unfurnished).
Since there is no pre-established list of items considered ‘exceptional’, after taking a look at the local rental market and using common sense, property owners may add additional rent for any features that appear exceptional. Such features which could justify additional rent include:
- Having a terrace
- High-quality furniture
- Exceptional kitchen equipment
- Amazing views over a Parisian monument
What are the most profitable long-term rental properties in Paris?
If you are looking to invest in a property in Paris, be aware that smaller apartments are the most sought-after amongst investors. According to a study conducted by SeLoger, studios are so popular amongst investors that stock is dangerously low. The reason behind that is that their rental yields are around 5%, on average, and because the rents are lower, they attract both students and young professionals. Plus, as these properties tend to have a higher occupant turnover, the property is more frequently repaired or renovated which keeps the residence attractive both for future rentals and resale.
Medium-term rentals in Paris
There are two ways to go about renting your property on a medium-term basis: the mobility lease or the “bail civil” (commercial lease agreement).
The mobility lease is for professionals undergoing training or travelling, students in higher education, interns or young professionals completing a VIE or apprenticeship programme. Its duration must be between 1 and 10 months, renewable within the period of these 10 months. Tourists do not fall into this category. The property must also be furnished and you can either use your main residence or your second home for this type of rental.
Rental rates are capped, just like they are on the long-term rental market, and are based on property criteria such as its location, its proximity to a metro station, whether it has a lift or not, the condition of the property, the type of furniture and the equipment it has, the views, etc.
The “bail civil”, on the other hand, is not subject to rent caps, but it is not as advantageous as the mobility lease since it must be signed for a minimum period of three months.
What are the advantages of medium-term rentals?
Advantages of renting your property on a medium-term basis are numerous but it’s important that you align the rental term with your personal financial goals. If you are purely buying a property for the purpose of renting it out, a long-term contract will be better suited as it generates stable rental yields, giving you peace of mind.
On the other hand, if you wish to occupy your property a few months during the year, renting your property out on a medium-term basis, either through a mobility lease or a “bail civil”, will be more advantageous.
- Medium-term rentals generally generate yields up to 25% higher than long-term rentals
- As opposed to short-term rentals, there is no limit of 120 days per year if you are renting your main residence
- If your property is a pied-à-terre or a secondary residence, you will be able to occupy your property as much as you want
- Less investment is required for medium-term rentals when compared to short-term rentals: lower occupant turnover and fewer hours spent cleaning the property
- Because of the nature of medium-term rentals, tenants are generally much more respectful compared to long-term rentals and the property tends to deteriorate less rapidly
Short-term rentals in Paris: Is it possible?
France is the most popular country visited by tourists and Paris is often at the top of travellers’ lists thanks to its unique mix of culture, gastronomy and history. Indeed, the capital attracts tourists from all over the world all year long. When the pandemic ends, the French capital will regain its tourist flow throughout the year.
In order to populate Paris with residents not only tourists, a whole series of rules have been put into effect. Just like any other major European capital, it is extremely difficult for a landlord to rent out their primary residence on a short-term basis for more than 120 days a year. Despite these numerous restrictions and regulations, some owners find legal alternatives which permit them to rent their secondary home on a short-term basis. One popular method is transforming a commercial property in Paris into Airbnb-style accommodation.
In fact, renting a furnished property on a short-term basis is fully authorised in Paris, with no time limit and throughout the year, if the premises have what is called “commercialité” – the apartment is then considered as a commercial unit that can be rented out.
Not subject to rental caps, rental yields for such properties are significantly higher (up to 10% for well-located properties) than those generated by long-term or medium-term rentals. However, such properties are very rare and hard to find. This scarcity also means that they are sometimes more expensive. Some buildings though have special co-ownership rules forbidding short-term rentals even if the property has “commercialité”, so be careful before making a move.
Property search service
A recognised expert in Parisian real estate for over 17 years, we help French and international investors find the property that matches their lifestyle and their long-term goals. Whether it is for a primary or secondary residence, we support our investors throughout the purchase process and introduce them to our trusted circle of dedicated experts in order to provide the best possible advice.
Do not hesitate to contact us to find out more about renting in Paris, whether it is on the short-term, medium-term or long-term market.
Find a property that suits you
We can manage your property search and centralise everything for you so that you don’t have to worry about anything.
- It will allow you to save time on pre-visits and the selection of apartments as we will do it on your behalf.
- As the market is very competitive, reactivity is key. We know that you are busy and will jump on any opportunity we spot that might fit you.
- We know the Parisian market very well and are able to negotiate and react quickly
- We have access to a large stock of Parisian properties and have trusted partners in our network that have additional properties that might fit your needs. Off-market properties and pre-launches will also be in the mix and we’ll let you know of any good fit we hear about.
- You will have only one interlocutor and don’t have to deal with all the stakeholders. We will centralise everything for you.
- This is also a hassle-free process as you are dispensed from the administrative and legal burden.
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Athena Private Finance and its French-focused company French Private Finance make accessing mortgages, development finance and other financial services easy for our international clients. Their skills and experience enable investors in Paris to move quickly along the purchase process, increasing the investor’s chances of being able to secure their chosen investment.