Inflation: rents saved, but charges will explode

Loane Nader 13:49pm, March 22, 2023

If inflation has been hurting French households since 2022, when it reached 6.2% in February, their rents have not suffered as much as their shopping baskets. According to Clameur, the first private housing observatory, rent prices have risen by an average annual rate of 1.3% over five years. If we focus on apartments, they increased by 1.4% while houses saw their rents increase by 1.2%. Usually, the rise in consumer prices has a direct impact on the rise in rents and housing, which can lead to some surprise in the amortization seen over the past year.

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An increase in expenses to be anticipated

Thanks to the government's tariff shield on the rent benchmark (IRL), it has not increased this year since it was put in place in the last quarter of 2022, to set it at 3.5%. The price increase is therefore not applied to rental rates, but it could be short-lived since this system is due to end in the second quarter of this year, a deadline that comes too early for some.

But there is always a flip side of the coin, which can be observed here on the side of the donors, because they are the ones who bear the cost of this tariff shield and will suffer the increase in the property tax, whose bases have been updated to 7% for 2023, by the Finance Law.

Nevertheless, if tenants do not see themselves paying much more for their rents, they will observe in the near future an escalation in the prices of their charges. As the tariff shield does not apply to the increase in energy prices, they will be charged again, even for condominiums that have benefited from tariff protection on gas and electricity. This delay can also be explained by the time taken by decisions at the general meeting, which must also take into account insurance, service contracts, works etc.