Rents: record increase in the IRL… before it peaks


By Olivier Cheilan |

invest.fr |

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The benchmark rent index for the second quarter of 2022 rose by 3.6%. This is the largest increase ever observed in the IRL in its formula in force since 2008.

Rents: record increase in the IRL... before its peak |  Photo credit: Shutterstock

Rents: record increase in the IRL… before its peak | Photo credit: Shutterstock

The reference rent index (IRL) for the second quarter of 2022 rose by 3.6% (to 135.84), which confirms its acceleration after +2.48% in the previous quarter and +1.61% in the fourth quarter of 2021. It is of course the return, then the acceleration of inflation which causes this change while the progression of the IRL was still almost zero in the first quarter of 2021 (+0.09%). This is also the largest increase ever observed in the IRL in its formula in force since 2008.

Acceleration of inflation

This index published by INSEE is in fact calculated from inflation excluding tobacco for the last 12 months and serves as the basis for the annual rent review. Concretely, on each anniversary date of the lease, the rent can be revised upwards according to the last known IRL. Thus, this publication concerns leases that refer to the IRL of the second quarter, ie leases whose anniversary date falls between mid-July and mid-October.

The revision is made on the rent excluding charges. A tenant with a rent of 1,000 euros (including 80 euros of charges) will, for example, see his naked rent go from 920 euros to 953.12 euros (+ 3.6%), or 1,033.12 euros including charges.

+3.5% for the next 4 quarters

With the “rent shield” that the government still has to pass this summer as part of the emergency measures bill for the protection of purchasing power, the next increases in the IRL should however be capped at +3 .5% for a temporary period of 1 year. Concretely, this cap on the IRL at +3.5% would concern rental contracts whose anniversary date is between mid-October 2022 and mid-October 2023.

Without this exceptional mechanism, the rise in the IRL, which passes on the trend in consumer prices with a lag of about 12 months, would have quickly climbed between 5% and 6%.





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