The Law No. 2014-366 of 24 March 2014 for Access to Housing and a Renovated Urban Planning, known as the ALUR law or Duflot II law, is a French law relating to housing.
A legislative translation of proposal 22 of François Hollande's presidential program and brought before Parliament by Cécile Duflot, the law notably aims to introduce rent regulations and a universal rent guarantee. It modifies numerous legislative provisions on the sale and rental of housing, the allocation of social housing, construction standards, and changes important principles in urban planning, in particular the abolition of the floor area ratio, the transfer of powers from communes to inter-commune bodies in the design and implementation of local urban planning (PLU), which becomes an inter-municipal local urban planning (PLUI).
The law, comprising 177 articles and spanning 150 pages of legislative and regulatory texts, has been the subject of strong criticism from housing professionals and liberal economists, who accuse it of slowing construction and discouraging investors. Estimating that the law costs the country between 0.4 and 0.5 points of economic growth, Prime Minister Manuel Valls decided on 29 August 2014 to reform the parts of the law he considered most hindering to construction and growth.:,.
Background of the text
Government objectives
This law is part of a broader government program on construction (target of 500,000 new homes per year), a draft plan to combat poverty and social exclusion, and an ecological transition project. « Ma conviction n’a pas changé : l’échelle intercommunale est la plus pertinente pour élaborer une planification véritablement stratégique, parce qu’elle permet à la fois de mutualiser les ingénieries et les savoirs et d’exprimer une solidarité territoriale », a déclaré la ministre de l’Égalité des territoires et du Logement, Cécile Duflot. « Mais j’ai entendu la demande forte de laisser s’exprimer les communes » et le compromis trouvé entre le Sénat et l’Assemblée « fait droit à cette demande »: « Le PLU sera donc intercommunal, sauf si les communes estiment qu’elles n’y sont pas prêtes » ; la ministre citée par une dépêche de l'AFP (Martine Kis) reprise dans Le Courrier des maires et des élus locaux
For Cécile Duflot, the goal is to "regulate the market, protect citizens, and innovate for better construction". In terms of regulation, this involves “sustainably controlling rents,” “simplifying and securing rentals,” “rebalancing housing costs,” “providing clear rules for professionals,” “initiating the ecological transition,” and “modernizing urban planning rules. In terms of protection, the aim is to guarantee rents, combat substandard housing, implement a housing policy geared towards rehousing, and prevent the deterioration of condominiums. In terms of innovation, the aim is to “promote the development of alternative forms of housing” and “introduce greater transparency in social housing”.
The law aims to create more sustainable cities and housing that consume less energy and are built to meet needs, limiting urban sprawl. by densifying suburban neighborhoods and halting the artificialization of the last remaining natural and agricultural areas on the outskirts of cities, including commercial developments and their space-consuming parking lots.
Reservations of economists from the Economic Analysis Council
In note number ten from the Economic Analysis Council (CAE), published in October 2013, authors Étienne Wasmer and Alain Trannoy criticize two points of the Alur law: rent control and universal rent guarantees.
Regarding the first point, they believe that assessing reference rents will be very difficult and consider that “before any generalization, it would be essential to conduct a preliminary experiment in pilot areas”.
Regarding the second point, instead of this mechanism and the universal rent guarantee (GUL), they propose the establishment of local joint committees responsible for these disputes, similar to what is done in Quebec..
Although the CAE is responsible for advising the Prime Minister, according to Le Journal du dimanche, the minister's office considered these two economists to be “ultra-liberal” and felt that their report was “out of touch with the market and French culture.”
Legislative process
The bill was presented on June 26, 2013 in first reading to the National Assembly. The bill was adopted in first reading in the Assembly on September 17, 2013. Adopted by the Senate in October 2013, after a few amendments, including the extension of the winter truce until March 31. Adopted by the Assembly in second reading on January 16, 2014. Adopted at second reading by the Senate on January 31, 2014. The Senate modified the universal rent guarantee (GUL), which is no longer financed by a tax but by public funds. Final vote in the Assembly on 19 February 2014. On March 20, 2014, most of the ALUR law was deemed constitutional by the Constitutional Council. Four points were rejected: in cases where dependents live with people on low incomes, the combined income of the household must be taken into account, not just that of the tenant; the measures derogating from rent control were relaxed; the transfer of shares in a real estate investment company; the possibility for the general meeting of co-owners to allow short-term rentals to passing customers.
Main features of the ALUR law
Measures concerning rentals
Rent control The law's approach is to consider that despite the law of 6 July 1989 on rental relationships and despite the DALO law, in certain cities or neighborhoods, rents have "become incompatible with household budgets", the reason being "a market that has been left to its own devices for years.” With this law, the government seeks to “eliminate excesses, contain price increases at a manageable level, and thus protect the budgets of French citizens.”
The creation of local rent observatories (associations or public interest groups, approved by the Minister responsible for housing, under conditions set by decree, the nature of the data collected and the conditions for its transmission and use will be set by decree of the Council of State) has the stated objective of "making rents more transparent." These observatories "may be created at the initiative of local authorities, inter-municipal public cooperation establishments with their own tax base responsible for housing, or the State. Their mission includes collecting rent data for a specific geographical area and making representative statistical results on this data available to the public". These observatories will be mandatory in areas of housing shortage
The law designates certain zones as "tense" (28 urban areas with over 50,000 inhabitants), in which it seeks to impose rent price control (through the application of the tax on vacant dwellings). An annual prefectural decree will establish three rent indicators (per housing category and per neighborhood) for these areas: a median reference rent; a median reference rent increased by 20%, beyond which the landlord cannot go; a reduced median reference rent (30% below the median) below which the landlord can request an increase.
A "complementary exceptional rent" (or "exceptional rent supplement") may be added to the basic rent for dwellings deemed particularly "well-located" or more comfortable. However, the tenant has the right to challenge this supplement before the Departmental Conciliation Commission (CDC).
Historically, it is worth noting that in the past—specifically between 1622 and 1649—seven decrees were issued to enforce rent reduction in Paris. The economist Henri Baudrillart observed: "The landlords took no notice of this, and one then witnesses one of those instructive struggles between the natural law which governs interests according to the fluctuations of supply and demand, and the positive law which claims to make it yield to considerations of humanity or politics".
After the measure was cancelled by the Justice system at the end of 2017, a subsequent rise in rents for new leases in Paris was observed in the following months, with the rate of compliant rents plummeting from 40% to 13%. Rent control was once again permitted for "tense areas," on an experimental basis for the next five years, by the 2018 Élan Law.
New rental regulations
This law aims to reduce tensions between tenant and landlord, and to protect the buyer of a dwelling, as part of the "simplification shock" (a French administrative reform) which reduces the sales file from 120 pages to 20 pages of documents.
Agency fees are now the exclusive responsibility of the owner, but not the fees for drafting the rental lease, the inventory of fixtures (or état des lieux), visiting the dwelling, and compiling the rental application file. The rental file includes the lead diagnosis (CREP), the asbestos diagnosis, the Energy Performance Diagnosis (DPE), the natural and technological risks report (ERNT), and the electrical diagnosis, the cost of which remains shared between the owner and the tenant.
Regarding rental charges (or tenant expenses), the landlord must keep the supporting documents for these charges available to the tenant for a minimum of six months.
Regarding the required documents for a tenant, "to prevent abuse, a list of the documents that can be required from a tenant will be determined. A standard lease form is being created, and standard procedures for drawing up the inventory of fixtures (état des lieux) are defined. For greater fairness, furnished properties used as primary residences are subject to the same obligations as unfurnished properties, and the rental of furnished tourist accommodation is regulated." If the owner wishes to undertake work during the lease term, the tenant must allow this work to take place, but a proportional rent reduction must be applied if the work lasts more than 21 days.
The statutory limitation period (or prescription period) for unpaid rent or charges, or for any action arising from a rental contract, is extended to 3 years; however, the period for annual rent reassessments is reduced to 1 year.
For furnished rentals, the law aligns with that of unfurnished rentals, defining the obligations of landlords and tenants, and establishing the competence of the Departmental Conciliation Commission over disputes relating to furnished properties.
"Block sales" (or ventes à la découpe) will be better regulated (notably including protection for elderly tenants). The rental of furnished tourist accommodation will also be better regulated.
In the event of the dissolution of a Civil Solidarity Pact (pacte civil de solidarité), the tenant may request a judge to retain the dwelling. The judge will assess the situation and grant or deny this right, in the presence of the landlord.
For all leases signed from 27 March 2014: When a tenant wishes to give notice to their landlord, they are entitled to a reduced notice period of one month if they obtain social housing, if they are recipients of the Adult Disability Allowance (AAH), or for health reasons. When it is the landlord who wants to give notice to their tenant (in the event of sale or repossession), they must take into account the age and income conditions of protected tenants, which have been “relaxed”. Similarly, a landlord purchasing an occupied dwelling can no longer give immediate notice to sell or take possession of the property. The deadline for returning the security deposit to the tenant is reduced to one month if the condition of the property at the end of the tenancy is the same as at the beginning, and the interest due in the event of late payment is 10% of the rent (excluding charges) per month of delay.