With a furnished apartment which is designated as the tenant’s principal residence, there may be a provision to review the rent, but the landlord is not free to choose the index to be applied and the review must occur annually. If this is overlooked, the landlord is not allowed to reassess the rent retrospectively. Let’s look at these rules as formulated under the ALUR law.
The rental agreement must provide for a rent review
It’s essential for the rental agreement to include scheduled arrangements to review the rent. Indeed, if the agreement does not include a specific clause addressing this issue, the rent must remain the same throughout the tenancy.
The revision date and index applicable
The index which must be used if the rented property is the tenant’s principal residence is the IRL rents benchmark index, published quarterly by INSEE in the Official Journal. This index gives an average of consumer prices over the previous twelve months (excluding tobacco and rents).
If the rental contract review clause does not indicate which quarter is to be used as a reference, this will not present a problem in practice. In this situation, it is simply necessary to refer to the last Rent Reference Index published on the date the rental agreement was signed.
Where the rental contract provides for a rent review, this will occur annually on the date agreed between the parties and specified in the rental agreement, or otherwise on the anniversary date of the rental contract.
How to calculate the revised rent
Taking the example of an accommodation rented since February 1 of year N at a rent of € 900. At the time the rental agreement was signed, the last Rent Reference Index available was the one published in the third quarter of the year N-1. Therefore, the new rent at 1 February of the year N + 1 amounts to: € 900 x (IRL for the 3rd quarter of year N / IRL for the 3rd quarter of year N-1)
A rent review is only effective from the date of application
If the landlord fails to indicate his wish to implement a rent review within one year of the effective date, he is deemed to have renounced the benefit of the review clause for that year.
In practical terms, the landlord usually announces his intention to review the rent by advising the tenant of the amount of the new revised rent a few days before it becomes due under the review clause.
If the landlord responds late, but still within a period of one year from the due date, the rent review will only take effect from the date of his application and cannot be retrospectively applied. Before the ALUR law came into force, a negligent landlord could request a rent revision backdated for up to five years.
However, if the furnished rental is not the tenant’s principal residence, then different rules apply: Rent adjustments on a furnished second home.