Rental Values in France to Show only Slight Rise

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The French national rental index (indice de référence des loyers or ‘IRL’) of domestic property under lease progressed by 0.47% in the third semester – the slowest increase since the beginning of 2010.

The rent of tenants already in place will increase very little this year. The IRL index which serves as the basis for annual rent revisions increased by only 0.47%. This makes it the slowest increase since the first quarter of 2010 (when it increased by 0.09%).

The IRL index is based on inflation rates that show no signs of slowing down at present. In September, consumer prices increase by just 0.3% over a year. Following the slow-down in inflation, the rental index has been dropping accordingly since the end of 2012 (+1.88% in the final quarter of that year). But the slow-down in rental growth has become even more pronounced this year. During the first quarter, the IRL progressed by 0.6%, then by 0.57% in the second. While the inflation rate has slowed to a near-zero rate, so too has that of the IRL. At the end of 2009, the rental index had retreated by 0.06% in the final quarter.

Whatever happens, right now landlords can increase their rents by 0.47% in the case of leases that are up for review in the third quarter – provided that the rental contract is one that allows for an annual rental review.

New rental agreements are also showing a similar pattern. Between January and the end of August, they increased by 0.7% on average according to figures from national rental watchdog Clameur. In 2013, they had increased by 0.6% on average in the context of a national inflation rate of 0.9%.

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