Paris Buy-To-Let Investment: Rent Controls, Tax Regimes and Possession Rules

Rent Regulation and Annual Indexation

Residential lettings in Paris are strictly regulated under the Loi n° 89-462 du 6 juillet 1989, amended by the Loi ALUR and the Loi ELAN. Paris operates under a mandatory rent control system known as encadrement des loyers. Each year, the Préfecture de la Région d'Île-de-France publishes reference rents (loyer de référence) per square metre based on geographic zone, number of rooms, period of construction, and lease type (furnished or unfurnished).

Landlords cannot set a base rent exceeding the maximum reference rate (loyer de référence majoré), which is set at 20 percent above the benchmark figure. A rent supplement (complément de loyer) may be charged only if the property possesses exceptional comfort or location characteristics not captured in the standard benchmark, such as a large private terrace or exceptional view. Under the Loi Climat et Résilience, energy-inefficient properties rated DPE F or G on the Diagnostic de Performance Énergétique cannot apply a rent supplement.

Annual rent adjustments during an active tenancy are strictly linked to the Indice de Référence des Loyers (IRL) published quarterly by the Institut National de la Statistique et des Études Économiques (INSEE). Rent indexation cannot exceed the percentage change in the IRL over the preceding four quarters.

Since 1 January 2025, properties rated DPE G are completely prohibited from being let under new or renewed residential leases. Properties rated DPE F face the same prohibition from 1 January 2028.

Short-Term Lettings and Municipal Licensing

Short-term holiday lettings are heavily restricted in Paris by the Mairie de Paris and national legislation under the Code de la construction et de l'habitation. Letting a primary residence as a short-term holiday rental is capped at 120 days per calendar year. Property owners must register the dwelling on the official municipal online portal to receive a 13-digit registration number, which must appear on all booking platform listings.

For non-primary residences or second homes, letting property on a short-term basis requires a formal authorization for change of use (autorisation de changement d'usage) issued by the Mairie de Paris. In Paris, this authorization is granted only upon payment of compensation (compensation), which requires the owner to convert an equivalent surface area of commercial space into residential housing within the same administrative sector.

Under the Loi Le Meur, all short-term furnished tourist rentals (meublés de tourisme) must maintain a valid national registration number. Operating an unpermitted short-let can incur civil penalties of up to 100,000 euros per property under Article L651-2 of the Code de la construction et de l'habitation.

Non-Resident Rental Tax Regimes

Non-resident individual property owners are subject to French income tax on net rental earnings derived from French properties, managed by the Direction Générale des Finances Publiques (DGFiP). The tax treatment depends on whether the property is let unfurnished or furnished.

Unfurnished rentals generate income categorized as Revenus Fonciers. Landlords with gross annual income under 15,000 euros can elect for the Micro-Foncier regime, which applies a flat 30 percent allowance for expenses. Income above 15,000 euros must be declared under the Régime Réel, allowing deduction of actual costs including mortgage interest, repairs, management fees, and property taxes.

Furnished rentals generate income categorized as Bénéfices Industriels et Commerciaux (BIC) under the LMNP (Loueur en Meublé Non Professionnel) status. The Micro-BIC regime grants a flat allowance on gross revenue (30 percent capped at 15,000 euros for unclassified tourist lets; 50 percent capped at 77,700 euros for long-term residential furnished lets). Under the LMNP Régime Réel, landlords can deduct actual operating costs and apply building depreciation (amortissement) against rental revenue, frequently reducing taxable rental income to zero for tax purposes.

For non-residents, French-source net taxable rental income is taxed at a statutory minimum rate of 20 percent up to 28,797 euros (for 2026 tax returns), and 30 percent for income exceeding this threshold. Social charges (prélèvements sociaux) apply at a standard rate of 17.2 percent. However, non-residents who are affiliated to the statutory social security system of an EU/EEA member state or the UK pay a reduced rate of 7.5 percent (CSG/CRDS allocation).

Property Management, Service Charges and Ownership Taxes

Professional property management fees in Paris generally range between 6 percent and 8 percent of gross collected rent, plus 20 percent Value Added Tax (TVA). Fully managed packages incorporating rent guarantee insurance (Garantie des Loyers Impayés or GLI) typically cost between 9 percent and 11 percent plus TVA.

Multi-unit residential buildings are governed by the co-ownership law (Loi n° 65-557 du 10 juillet 1965). Annual service charges (charges de copropriété) are administered by a appointed building manager (syndic de copropriété). Service charges are split into recoverable charges (charges récupérables), which the landlord can pass on to the tenant (e.g. cold water, elevator maintenance, communal lighting), and non-recoverable charges borne by the owner (building structural repairs, major works reserve funds, syndic management fees).

Landlords are also subject to annual local property tax (Taxe Foncière), assessed by the DGFiP based on the cadastral rental value of the property. Ownership titles and cadastral boundaries are officially registered with the Service de Publicité Foncière.

Notice Periods, Lease Terms and Eviction Rights

Residential leases in France are strictly governed by the Loi du 6 juillet 1989. Unfurnished leases carry a minimum mandatory duration of 3 years for individual landlords. Furnished leases carry a minimum duration of 1 year, or 9 months for student tenancies (bail étudiant).

Tenants can terminate the lease at any time by giving statutory notice: 1 month notice applies in Paris due to its classification as a tight market zone (zone tendue).

Conversely, a landlord can give notice of non-renewal only at the end of the lease term, requiring 6 months notice for unfurnished properties or 3 months notice for furnished properties. Notice must be served via registered letter with confirmation of receipt (LRAR) or by a bailiff (commissaire de justice). Landlords can repossess a property only under three statutory conditions: 1. Repossession for personal occupation as a primary residence by the owner or immediate family. 2. Sale of the property (the tenant retains a statutory right of first refusal for unfurnished lets). 3. Legitimate and serious grounds, such as repeated non-payment of rent or breach of lease covenants.

If a tenant defaults on rent, recovery of possession requires formal legal proceedings through the Tribunal Judiciaire. France enforces a mandatory winter eviction moratorium (trêve hivernale) from 1 November to 31 March each year, during which no court-ordered evictions can be physically executed by a commissaire de justice.

*This publication provides general regulatory information for property professionals and does not constitute formal legal or tax advice.*