For several years now, real estate professionals agree that house or flat sharing is no longer just for students. According to a survey for the estate agents Guy Hoquet carried out by CSA, 54% of people in work choose this life style compared to 45% of students and 1% of retired people.
This trend is the result of current difficulties in the economy. Accommodation-sharing enables people to have more living space for less rent. The same study shows that 83% of French people cite budget constraints. 1 in 6 French people declare they live or have lived in shared accommodation.
Landlords may be attracted to this form of rental for reasons of profitability or the situation of the property. However, does rent-sharing pose a risk for landlords?
A few words about rent-sharing
The law of 24 March 2014, known as the ALUR Act, defines rent-sharing as “rental of the same accommodation by several tenants for whom this is their principal residence […]”. The Macron Act of 6 August 2015 clarifies this by saying that this definition does not apply to couples who are married or in a civil partnership (a “pacs” in French) on signing the tenancy agreement.
Student rent-sharing is a special case since all the tenants are students.
Rent-sharing and liability for rent
Co-tenants are jointly and severally liable for payment of the rent. If one of them withdraws then his or her liability for payment of rent lapses at various times depending on when the lease was signed.
For leases signed before 27 March 2014 and not yet renewed or else renewed on a tacit basis before 8 August 2015, the liability of that co-tenant ceases on the anniversary date of the lease.
For leases signed after 27 March 2014 and those renewed tacitly after 8 August 2015 and also those signed after that date, the liability of that co-tenant ceases at the end of the notice period when a new tenant replaces him or her or, if no replacement comes in, then 6 months after the end of the notice period.
The departing co-tenant is better protected now than in the past since he or she is no longer liable indefinitely for rent for the accommodation they have left.
The landlord, however, is less protected and may well fear that rent-sharing is a result of short-termism or instability and therefore more risky.
Rent-sharing and guarantee
A guarantee is a document whereby a person is committed to paying the rent on behalf of a tenant in default. The guarantor must provide the landlord with documentary evidence of solvency. The government decree of 5 November 2015 sets out the only documents that a landlord may demand from a tenant or a guarantor.
The Macron Act adds a further formalistic touch to the guarantee process by making it obligatory for the guarantor to state precisely the name of the person for whom he or she acts as guarantor.
The purpose of such guarantees is becoming more and more limited and uncertain. Rent Guarantee Insurance is emerging as the right solution a landlord’s peace of mind.
We would remind readers that the Boutin Act of 25 March 2009 forbids landlords to compel tenants to nominate a person as a joint and several guarantor for unpaid rent if that landlord has already taken out Rent Guarantee Insurance. This double guarantee is forbidden for unfurnished lettings.
Liability of the guarantor for the rent
The guarantor remains liable for payment of rent due by the person guaranteed, for six months after the end of the legal notice period except where he or she is replaced on the lease. If this happens then liability ceases as soon as the new tenant comes in.
It is important to bear in mind the date when the lease was signed. The liability of the guarantor ceases at the same time as that of the outgoing co-tenant.
Today, relying on a guarantor is no longer seen as a wall of defence against the risk of unpaid rent.
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