A study with furnished rental landlords in Paris

37% of furnished rental landlords believe that the loi ALUR has not affected their business activity

In Paris, some 17,000 lanlords offer their properties as seasonal furnished rentals*. The real estate agency Lodgis, which specialises in furnished rentals in Paris, has conducted a close study with these landlords in the French capital to address the following: what are their financial interests, how have recent legislative changes affected their business activity, and who are they?

Key figures from the study:

• 84% of landlords opt to invest in a furnished rental in order to supplement their incomes
• 88% prefer furnished rentals to unfurnished rentals on account of legal flexibility
• As a result of the loi Alur, 52% of landlords have chosen to adapt and continue their business activities
• More than half (52%) of furnished rentals are for a period of 6 months or more

Based on the « Qui sont-ils ? » section of a study involving 6,500 landlords and 106 landlords between August 18th and September 9th 2016 for the other points raised.

What are their business motives?

Contrary to popular opinion, landlords don't just enter the furnished rental business due to its favourable tax system. Above all, they do so in order to supplement their incomes for greater financial comfort (84%) and to benefit from the legal flexibility in this area of the rental sector (88%).

Essentially, the furnished rental sector is more attractive than that of unfurnished rentals on account of its flexible nature: contracts can be shorter and advance notice doesn't have to be so long. The financial position of tenants tends to be more secure, which reduces the risk of unpaid rent and is also a reason cited by 43% of landlords.

The tax incentive to operating in the furnished rental sector remains a key motive for landlords, coming in second place based on the two questions asked (72% and 69% respectively). It should also be emphasised that private landlords view the business of letting their furnished properties as a safe investment for the future: in addition to the current income generated, they are looking to create a secure asset (68%) and to plan for retirement (61%).

How have legislative changes affected the business activity of furnished rental landlords?

A number of scenarios have been pictured of how landlords would react following the enactment of the loi Alur. More than two years have passed and this law appears to be having limited effects: 37% of participants said that it hasn't had any impact on their business activities.

For all that, more than half (52%) of landlords stated that they intend to continue their furnished rental activity whilst adapting to the changes enforced. 82% of participants also said that they had become more rigorous in terms of accepting tenants, whilst 62% have increased their rent. 43% said that property maintenance and upkeep was now lower. Only 17% of landlords have lowered their rents in response to the regulations enforced. In view of this, one questions how effective these measures have truly been, since they were initially designed to favour relations and to limit rent rises.

After the loi Alur was came into effect, 11% of furnished rental lessors in Paris chose to stop this business activity. They cited the sale of their properties (63%) and renting them unfurnished (19%) as the main reasons for ceasing activity. 18% of participants have removed their properties from the market, either in order to live in them as a primary residence or to use them as a casual pied-à-terre... When you consider that unoccupied properties are being targeted by the public authorities, the incentive to doing this seems less obvious.

Who are the furnished rental landlords in Paris?

Based on the study, 48% of landlords live in the Paris region. Those living outside the Ile-de-France make up a considerable 41%, whilst 11% of landlords are expats or foreigners overseas.

Furnished rental properties in Paris are generally of a small surface area (46% are studios; 40% are 2 rooms). Large family apartments of the ''F4'' kind make up just 3% of the furnished rental properties on the market.

The majority of furnished rental contracts (52%) are for a period of 6 months or more. Following this, properties rented as a primary residence (21%) and 3-6 month rentals (20%) take a close 2nd and 2rd place.

The vast majority of landlords (87%) state that they have good or very good relations with their tenants, whilst relations are strained or hostile for the remaining 13%.

* Study by Opinion Way/FNAIM 2012

Read more:

• Taxes: the LMNP (private landlord) status to save money
• Dealing with damages to furnished rental properties: in theory and through case studies
  
• Lodgis now offers and integrates VR for all its 3D content
  
• Living in Paris: how to choose the right neighborhood?