What Will Be the Impact of Ending the Rent Cap?

Tenants can rest assured: despite the end of the rent increase cap, rents are not expected to rise significantly in the short term. 
 

The Ministry of Ecological Transition has confirmed the end of the rent shield, a measure established by the Purchasing Power Act of August 16, 2022, to temporarily limit rent increases. The cap on the Rent Reference Index (IRL) ended on March 31, 2024. However, tenants are not expected to face a significant increase in their rents in the coming months.
 

Rent caps have been lifted as of March 31
 

The rent control measure—or, more specifically, the IRL—was originally set to expire at the end of the second quarter of 2023. Its extension has protected tenants from excessive rent increases through the first quarter of 2024. The IRL, which serves as the basis for calculating rent adjustments by landlords, has been capped at 3.5% in mainland France, 2% in Corsica, and 2.5% in the overseas territories between October 2022 and April 2024.
 

Tenant Protection Extended Through Mid-July
 

Although the “rent shield” program ended on March 31, 2024, tenants will not immediately face a significant rent increase. This is because upcoming rent adjustments will be calculated based on the Rent Reference Index (IRL) for the first quarter of 2024, which is capped at 3.5 percent. The 3.5% cap will not be effectively lifted until the next publication of the Rent Reference Index in mid-July.
 

Furthermore, the landlord is not free to adjust the rent at will. Rent adjustments may be made only once a year, on the anniversary date of the lease or on another specified date, and only if this provision is included in the lease agreement. In such cases, the rent increase may not exceed the Rent Reference Index published quarterly by INSEE, based on changes in consumer prices (excluding tobacco and rent) over the past 12 months.
 

The IRL is expected to remain below 3.5% thanks to lower inflation
 

Inflation serves as the benchmark for calculating the Rent Reference Index. However, this general rise in prices is slowing, as shown in the economic, social, and financial report from the Directorate General of the Treasury cited by the website Droit-finances.net: "Annual average inflation is expected to show a sharp decline in 2024 due to the projected slowdown in food and manufactured goods prices. The report thus forecasts inflation of +2.6% for the coming year."
 

If this scenario plays out, it means that the Rent Reference Index will not rise exponentially over the coming months. It is therefore likely that the IRL published in mid-July by INSEE will remain below 3.5%, even after the rent cap is lifted. Rent increases should therefore continue to be moderate throughout 2024, to the benefit of tenants.