Rental Investment: By How Much Can You Raise Rents?

In the third quarter of 2023, the Rent Reference Index (IRL) stood at 141.03. In response to rising inflation, the increase in this index was capped at 3.5% through the end of March 2024. In some cities, the increase was even more moderate.

INSEE (the National Institute of Statistics and Economic Studies) publishes the Rent Reference Index (IRL), which is used to adjust rents for unfurnished or furnished rental units in the private sector (excluding public housing and rentals governed by the 1948 Act). This adjustment takes place annually when the lease agreement includes an annual adjustment clause.

To address high inflation and ease the financial burden of rent on households, the Act of August 16, 2022, aimed at protecting purchasing power, had limited rent increases indexed to the IRL through June 30, 2023. This temporary measure, however, has been extended through the end of March 2024.

This increase is now capped at 3.5% to protect tenants' purchasing power, according to government regulations, from the third quarter of 2022 through the third quarter of 2023, with specific variations by region:

   3.5% in metropolitan France;
2.5% in the overseas territories;
2% in Corsica.

In practice, landlords are permitted to adjust rents in accordance with standard provisions on the anniversary date of the lease, but they must comply with the rates applicable in their region.

Since the Alur Act took effect, landlords must give notice of their intention to adjust the rent. If they decide to do so, they have one year from the scheduled date of the adjustment to submit a request to the tenant.