[Opinion Column] The Alur law, 3 years later: The furnished rentals market sails on troubled waters

The Opinion Column of Maud Velter, Associate Director of Lodgis
A Qualified Lawyer, Maud Velter specializes in the field furnished and temporary property rental. After working in the property department of a major Parisian law firm, she joined Lodgis in 2006 as Associate Director and General Counsel. Alongside with her position at Lodgis, she also regularly participates in conferences on legal and tax issues related to temporary furnished property rental. With her brother, Fabrice Petit (President of Lodgis), Maud Velter has also co-written the « Guide Pratique de la Location meublée et saisonnière » (Éditions Maxima).www.maudvelter.com

Three years have passed since the law of March, 24th 2014's enactment. The text, which counts around 177 articles, develops a real legal arsenal intending to revolutionize the real estate market. Indeed, the Alur law's goal was to improve the dealings between owners and tenants and foster everyone's access to appropriate and affordable dwellings. What are the consequences of this “legal tsunami” on furnished rentals? How not to get lost in this string of regulations? And most importantly, how to reintroduce an equilibrium between lessors and tenants?

It is necessary to make an observation: many measures of the Alur Law simply enacted practices deeply rooted in facts on which case law already gave a ruling. It's particularly the case for the standard rental contract and for the equipments' list enabling to consider a property as furnished, or even for the schedule of fixtures. If the text or its implementation decrees allowed to fill a very relative legal void, it doesn't bring any novelty nor clarification... Most of the time, it concerns minima regulations, without a real added value. Consequently, the question of the Alur laws' effective contribution to the rules already governing the market, is to be raised.

Obviously, the law didn't only transcribed the current practices, it also introduced a string of, not to say a real slew, administrative formalities. Information note, co-ownership regulations' excerpt, additional technical diagnosis... Now, an important number of documents have to be attached to the rental contract. If the will to provide more information to the tenant is a praiseworthy ambition in substance, we can legitimately doubt its efficacy as things stand. In practice, which tenant carefully reads all these particularly stodgy documents?

Where some information keep accumulating, other points seem, on the other hand, neglected by the text. Indeed, an omission of the Alur law rarely noticed is to be pointed out: among the 177 articles included in the text, there is no specification regarding the notion of “short-term” rental. Which, in fact, creates a regrettable confusion between the nightly or weekly tourist rental and the temporary furnished rental, which duration goes from few months to a year. This last type of accommodation yet corresponds to a recognized need (business travel, studies, divorce, construction work). This way, the law gives rise to interpretation and thus creates a lack of legal security for owners and tenants.

An other particularly mediatized Alur law's hole is the Parisian lease control and now Lille is concerned too. As for the furnished rental, it's interesting to have a close look at the way the standard rent amount is calculated. Since the OLAP (Parisian metropolis' rent observatory) doesn't have enough data to determine the median rent of furnished rentals, the prefect set an arbitrary gross-up rate of 11% in comparison to the unfurnished apartments' standard rent. Consequently: a flat-rate top-up applying to furnished properties regardless of their location or characteristics. Once again, the furnished rental falls by the wayside.

Furthermore, the tenancy relations are, now, particularly destabilized. On top of being drowned under information, tenants are clearly disempowered. The example of the rent supplement is particularly eloquent: after signing the rent contract and accepting its conditions, the tenant has three months to contest the rent supplement's amount. Other major example, the lessor can't prescribe a compensation at the expense of the tenant who would constantly be late on their lease payment, however, if the lessor takes too long to return the security deposit after the tenant left, the law expressly states that a compensation will be paid to the latter. This widened gap is not only detrimental to the owners but also to the tenants! Indeed, the lessors face so many constraints that they become more fearful and selective regarding their tenants. This means that in tensed areas where demand is higher than supply, only the best dossiers- with the best guarantors and financial situation- succeed to get the property they wanted. This creates numerous frustrations since, instead of easing the access to housing for everyone, the vicious effects of the Alur law only restricted the market to the well-heeled tenants.

Taking a three year step back now, the effects of the Alur law are far from being satisfactory. At the dawn of 2017, the parliamentarians themselves were drawing up a mixed report. The general feeling after the law's enactment was a being disappointment: the real estate stakeholders were expecting a simplification shock, instead, layers of extra regulations were added to the measures already in place.
It remains to be seen if the next government will keep, modify or abrogate this law...

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