Hollande Proposes Nationwide Rent Freeze

One of the numerous promises of François Hollande’s presidential campaign was to freeze rent prices which were considered excessive. Many voters were personally invested in the promise: the price of the rent is one of the major difficulties facing the French middle class.

On the 4th of July, the media released Hollande’s proposition, drawn up by his Minister for Housing and Equality, Cécile Duflot. This decree is based on Article 18 of the law passed July 6th 1989, which says: “in the geographical area where the level and the evolution of the rent, compared with those observed in the territory as a whole, reveal abnormal growth (…) a decree of the Council of the State (…) can fix the maximum augmentation of the vacant housing’s rent.”

The decree plans a freeze of the renewed rental process (relocation) except when the owner makes, between the two renting parties, housing improvements whose cost exceeds half of the rent received during the year. In that case, the increase is limited to 15% of the work’s cost. The owner can also increase the rent if he can prove it has been under-assessed.

The measure will concern 43 housing agglomerations, which equates to 40% of the French population. The magnitude of the decree surprised many people who did not believe Hollande would have the guts for such a measure.

According to a survey from Ifop, 80% of the French population agree with the decree. However, Christian Jacob, president of the Union pour un Mouvement Populaire (UMP) contingent in the National Assembly said “it’s a false good idea. The right answer to the housing crisis is to improve the offer, to build new accommodation.” He is supported by the Home Owners’ associations which think the measure is too radical and aims at too many cities.

In fact, if the prices are too high but people continue to rent, it means that the law of offer and demand is respected. The problem has two solutions, the rent must be lower and for that, government can either fix the prices or create more housing to offer. Hollande wants to do both, the freezing of rent prices is an emergency’s measure but he also promised to build 500,000 new properties a year to make housing prices progressively go down.

The decree will be implemented on the August 1st if the Council of the State give it favorable notice.

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