Tuesday, July 6, 2010

Paris to Crack Down on Vacation Rentals

I'm wondering whether this recent spate of crackdowns on short term rentals is being caused by the recession? Are cash-strapped cities simply looking for new ways to impose fines, and thus bulk up the municipal budget? That certainly could be the case in New York, which passed a law just last week forbidding rentals of Big Apple apartments for less than 30-days.

 New York's not the only world city grappling with this issue. Today, the New York Times reported that the city of Paris in France will start enforcing a little-known, 2005 law which forbids rentals of less than a year. Violators who are caught face fines of 25,000 euros; repeat offenders could pay 1000 euros, per meter per day. Ka-ching!

The police had been originally charged with enforcing the law, but since they haven't been doing so, the Mayor recently turned the matter over to the city's residential housing agency.  So far, 25 cease and desist letters have been sent out and the city's rental agencies, many long-established businesses, are in a panic. They've formed an organization to try and lobby the city to strike down the law, arguing that short-term rentals are important economic engines and serve a social need. To that end, the agents have commissioned a study on the matter, which should be released in the fall.

All in all, its bad news for budget travelers, many of whom were able to significantly trim their vacation costs in the City of Light by renting affordable apartments, shopping in Paris' marvelous food markets and cooking for themselves.

Since the mayor's housing agency only has 5 staffers, I'm guessing that, for now, most rentals will slip through unnoticed. But I hate to think of a tourist showing up in Paris with a stay booked, only to find that they have lost their deposit and will now have to scramble for a hotel because an owner's been caught.

I'm going to follow the issue closely and will inform you of any developments.

(Photo by Walter Watzpatzkowski)


  1. The one year minimum rule makes little sense to me.

    By law, a typical French leasing agreement has an undetermined duration and can be canceled at anytime with a 3 months (1 month in some cases: loss of job, people leaving on wealthfare ...) notice by the tenant(Article 12 of the loi n° 89-462 du 6 juillet 1989 ; Article 15 states than the landlord would have to give a 6 months notice). Hence, a landlord may rent for as little as 1 month - and actually may be forced to rent for as little as 1 month.

    If there was a 1 year minumum, then the two laws would contradict each other and since it is hard to imagine that the tenant who gave due notice would be forced to pay for the remaining of the year, I think that the 1 year minumum law would defacto be unenforceable (which may be something that the police figured out and may be the reason why they didn't enforce it).

    The NYT stated "To legally offer short-term rentals, owners would need to have their residential properties reclassified as commercial sites" ; so I think that the key is that you can not have a lease with definite duration unless you have a "commercial site". So, to make short term rentals legal, just draft a regular lease and cancel it early (looking back at Article 15, the notice period can be shortened if another tenant is found...)

    In any case, that should keep a few attorneys entertained and future leases may be draft in a way that would make it if not legal at least illegal in a way that could not be enforced.

    In short, I wouldn't worry too much about the future of short-term rentals in Paris (or France for that matter).

  2. I hope you're right Olivier. The Times went on to show how difficult it is to get a residential space reclassified as a commercial one (apparently, you have to get a commercial space to become residential, in many cases, so it's an even swap). We'll see where this goes!

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