Real estate professionals have spoken out to prevent a freeze on the Rent Reference Index (IRL), the basis for calculating the annual rent increase (except in specific cases) which is partly indexed to inflation . This freeze demanded by consumer associations, worried about the future increase in the IRL, has given rise to reflections at government level.
A meeting chaired by the Minister of the Economy, Bruno Le Maire, in the presence of the new Minister in charge of Housing, Amélie De Montchalin, invited this week the representatives of social housing, private housing, real estate agents, companies transaction management and promoters. The objective was to collect their proposals to find an intermediate solution consisting in reducing the impact for tenants of the coming acceleration of the rise in the IRL which passes on inflation with a certain lag, without penalizing landlords too much. .
A blocking of the IRL would also impact social housing
Lessors who can hardly be deprived of a mechanism to cover the increase in their owners’ expenses but also to participate in the maintenance expenses of their property and especially in energy renovation in an inflationary context which penalizes them themselves . Without forgetting that a blocking of the IRL would impact all residential rents, including social housing with a negative effect on the construction capacity of social landlords.
” Between January 2017 and April 2022, the IRL index was out of step with the inflation index, resulting in a certain, but regular, loss of purchasing power for private landlords, for whom income property are the complement of a modest pension which itself is not indexed to inflation “, had notably defended the National Federation of Real Estate (FNAIM). The catch-up effect, however, began to materialize in the last published IRL, that of the first quarter of 2022, with an increase of 2.48%.
The proposals of the FNAIM
The FNAIM offers two ways to moderate rent increases for one year. The first would consist of continuing to calculate the IRL on a quarterly basis for a year, but on the average of the four previous IRLs, “ which in reality amounts to taking into account inflation over 24 months and not 12 months “, we explain at the FNAIM. Currently, the calculation of this index takes into account the evolution of consumer prices over the last 12 months.
The second proposal would be to temporarily suspend the revision of the IRL by applying its level for the second quarter of 2022 (which will be known on July 13) for one year. However, this second quarter IRL is likely to see a spectacular rise as it will begin to pass on the surge in prices observed since the spring.
In all cases, the FNAIM defends the freedom to freely set rents for new tenants entering the premises during this period, in compliance with the rules in force.
The option to neutralize the energy component
Other levers would have been mentioned by the Government such as removing energy prices from the calculation of the IRL. The FNAIM is not against, provided that it is temporary. ” Landlords are also experiencing inflation and rising charges, especially as landlords are looming in considerable expense to meet energy renovation obligations. “recalls the President of the FNAIM, Jean-Marc Torrollion.
to know
The IRL 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.