Vacant property: what about putting it on the rental market?
4Keeping a property empty for several years does not always turn out to be the best decision. Deterioration and tax can make it expensive for the owner.
Some owners decide to leave their apartments empty rather than renting them. Staying out of the rental market is an extreme strategy. No problems with the complexities of rent regulation in Paris and no constraints caused by the new requirements under the ALUR legislation (standard lease, diagnosis). And of course, no hassle related to managing the tenancy (vacant property, rent reviews, repairs, unpaid rent).
* The disadvantages
The “empty” choice may not however be wise in the long term.
– Firstly, because an unoccupied property, and therefore not heated, is likely to deteriorate (humidity, premature aging of unused equipment).
– Next, property charges and repairs (small and large) still have to be paid every month without the possibility of the expenditure being tax deductible.
– And finally, a vacancy of two years or more is costly. The owner of a property that is deliberately left vacant has to pay a vacant property tax. The rate is 12.5% in the first year of vacancy and increases to 25% in subsequent years.
* Reasons for re-letting
– Putting a property on the rental market brings it back to life and means it maintains its value by keeping it up to date.
– In tight rental markets, as is the case in Paris, demand is still high and steady. There are numerous applicants for all sizes of property.
– Furnished rentals provide an alternative to unfurnished rentals. Non professional furnished rental (known as LMNP) over long periods generates income that is subject to little or no tax.
– The City of Paris recently launched the “Multiloc” programme. It enables owners to receive grants to finance renovations on vacant accommodation in order to put it back on the rental market. In addition, the programme offers not only cover for the risks associated with rentals, but also property management services.