French Rental Market Shake-Up: What Second Home Owners Need to Know

Rental of a second home in France has long been an attractive option for owners wishing to draw some income from the house when they are not using it themselves. It has also, however, long been the source of misunderstanding. In this article, we will review some of the main points of property and tax law that may affect those who rent out their French home.

In addition there have been various changes in law affecting rental properties over the past few years, with one new law having been adopted by the French parliament as recently as November 2024, with implications that are not to be ignored…

Just like many other countries, France has experienced a shortage of housing stock. The legislators promoting the new law identified that workers and students, among others, may experience difficulty in finding suitable accommodation.

Their suggestion is that furnished lettings have contributed to such problems. This may not be surprising in practice and is a phenomenon that has been seen in other countries as well, and indeed, there have been even more draconian restrictions elsewhere.

For quite a while now, many property owners in certain areas – notably larger cities – have had to declare that they have been renting their homes for holiday lets. The new law will extend this obligation across the whole of France.

The aim will be that this will be managed at a local level, with the power conferred on the Maire. Property owners who wish to rent out their homes will need to register with the Mairie. Failure to register when required could lead to the imposition of substantial fines. This should be in force by 20 May 2026 at the latest.

It is not only second-home owners who will be caught by the new legislation. The short-term holiday let market has seen an increase in people renting out their main residence while they may be away, notably via the various well-known online platforms. This can be lucrative, particularly in areas where annual high-profile social, sporting and other events may be held. One of the new measures will allow authorities to impose a reduction in the number of days an owner can rent their main residence from 120 to 90 days without being obliged to apply for a change of use.

The requirement to register rental activity, whether of a holiday home or your main residence, means that the Mairie will be able to control property rental in their towns.

While it can be understood that a major target of this legislation is the control of furnished lettings and rental property in general, it is clear that there are important consequences for taxation as well. The requirement for registering rentals should allow for the activity to be better tracked.

This should lead to better tax collection. It is important to remember that whenever a French property is rented, it is taxable in France. That is the case even if the owner is a taxpayer in another country. If, for example, you declare your income tax to HMRC in the UK, you must first declare the French property income to the French tax office. There is a Double Tax Treaty between the UK and France, so any tax paid in France is credited against the UK liability. Not all countries have such agreements with France, so if you are a tax resident elsewhere, you will have to check if you are able to claim that relief.

If the property is only rented out occasionally it is likely that you may not actually make a profit over the year. While no tax may be due in such circumstances, it is still important to file a tax declaration.

If the property is owned by several people, they will all need to file separate tax returns for their due proportion of the revenue, although a married couple (or a couple in a civil partnership) can file one.

There is also a local residency tax that will be payable. This is collected from the holidaymakers and calculated by reference to the number of people staying and the length of the stay.

Much has been written over the past couple of years about the increasing importance of energy efficiency reports. The intention of these is to entice owners to ensure that their properties become more energy efficient. In accordance with legislation from 2021, long-term residential lettings (as opposed to holiday lets) were subjected to a regime of obligatory energy efficiency reports, in which the worst-performing properties would have to be improved by certain deadlines.

Under the November 2024 law, this regime has been extended to properties used for holiday lettings as well. Going forward, the mayor will be able to require a valid energy efficiency report from any owner of a holiday let. Letting a property without a valid report could lead to an administrative fine of up to 5,000 euros. Diagnostic inspection companies are likely to be rather busy for the foreseeable future.

The regime will see an obligation for at least a gradual improvement in the energy efficiency of properties. From 2025 it will not be possible to rent a property rated in category G to holidaymakers. In 2028, properties will have to be in at least category E. And from 2034, property will have to be in categories A to D.

This will impose a burden on property owners, yet the aim is entirely understandable. It should lead to a substantial improvement in the energy efficiency of French housing stock. For the avoidance of doubt, energy efficiency reports are also required when properties are sold: this is not of itself just an attack on holiday lettings.

Properties within co-ownerships will also be subjected to a new regime for holiday letting. Co-ownerships are multi-occupancy developments – usually an apartment block or perhaps a group of properties on a holiday resort. Such developments will be governed by a set of rules known as the Règlement de Copropriété, which govern how each owner is entitled to use their own property. The new law entitles most existing co-ownerships to ban the use of properties for holiday lets, where two-thirds of the owners vote in favour of this restriction; previously, that would have required a unanimous vote.

In the future, the co-ownership agreement for a new development will have to include a clause as to whether holiday letting is permitted. Typically, the rules book would have been silent on this. Nevertheless, even if an existing agreement is silent, owners must still bear in mind that they remain entirely responsible for the people to whom they rent their property. That has always been the case, yet in an age of increased online bookings, it can be difficult to ensure that your holidaymakers will not cause a disturbance to other owners.

The new rules impose a number of new obligations on owners who want to let out their property in France. There are evidently various influences that have driven the regulation, not least of which is a desire to control the level of online holiday letting and to ensure it generates tax revenue. Penalties for non-observance can be quite large, so if you already rent out your home or are thinking of doing so, your first port of call should be to speak to the Mairie.