Complete Rental Management: A Landlord's Guide

Introduction

Rental management represents a set of legal, fiscal and administrative obligations that every landlord must master to secure their property investment. From drafting the tenancy agreement, collecting rents, managing the security deposit and annual settlement of charges, the steps are numerous and governed by a dense legislative framework: the Law of 6 July 1989, the ALUR Law of 2014, the ELAN Law of 2018, not to mention the provisions of the Civil Code. This guide is addressed to both the small property owner holding one to three properties and the experienced investor or professional manager. It covers the essential points of compliant, profitable and sustainable rental management, with emphasis on best practices and pitfalls to avoid.

1. Drafting and signing the tenancy agreement

The tenancy agreement is the cornerstone of the landlord-tenant relationship. Since the ALUR Law of 24 March 2014 and its implementing decree of 29 May 2015, a residential tenancy agreement must comply with a mandatory standard model for unfurnished lettings (primary residence) and furnished lettings. It must state in particular the identity of the parties, a precise description of the property, the habitable area (Boutin Law), the amount of rent, the duration (3 years for an unfurnished lease, 1 year for furnished), and the terms of revision.

Several mandatory annexes must accompany the agreement: technical diagnosis file (EPC, lead exposure risk certificate, natural and technological risk assessment), information notice of the rights and duties of the parties, and building regulations where applicable. Since July 2021, an EPC rated F or G is subject to restrictions on rent revision, and since 2023, properties rated G+ are prohibited from being let.

In tight rental markets (28 conurbations defined by decree), rent controls apply, notably in Paris, Lille, Lyon, Montpellier and Bordeaux. The landlord must comply with a reference rent plus a permitted increase, subject to administrative penalties.

2. Rent management and annual revision

Regular collection of rents is the heart of rental profitability. The landlord must issue a receipt free of charge on each request from the tenant (Article 21 of the 1989 Law). Rent revision can only take place once a year, on the date agreed in the lease, based on the Rental Reference Index (IRL) published quarterly by INSEE.

Since the Law of 16 August 2022 on purchasing power, the increase in the IRL is capped at 3.5 % for properties rated A to E, and frozen for energy-inefficient properties (F and G). In case of arrears, the landlord has several options: notice to remedy, activation of the termination clause, enforcement proceedings by bailiff, and referral to the small claims court. Rental arrears insurance (GLI) or the Visale public guarantee scheme can secure income.

3. Security deposit and inventory report

The security deposit is strictly regulated: it cannot exceed one month's rent excluding charges for an unfurnished lease, and two months for furnished. It must be returned within one month of handover of keys if the exit inventory report is satisfactory, or two months in case of damage. Beyond this period, penalties of 10 % of the monthly rent per month of delay apply.

The entry and exit inventory reports, drawn up in the presence of both parties, are crucial for justifying any deductions. It is advisable to supplement this with dated photographs and a detailed inventory for furnished properties.

4. Settlement of charges

The landlord may request monthly provisions for recoverable charges (Decree No. 87-713 of 26 August 1987) including water, collective heating, maintenance of common areas and waste disposal tax. A mandatory annual settlement must be carried out on supporting documents, communicated to the tenant one month in advance. If no settlement is made within three years, the landlord loses the right to claim arrears.