Rent control in Paris: review and outlook

Rent control in Paris is a policy first implemented in 2015, then reintroduced in 2019. The measure aims to regulate rent increases in an extremely tight market, where rents have risen significantly over the past two decades. The report by the Atelier Parisien d'Urbanisme (APUR, the Paris urban planning agency), in collaboration with CESAER, offers a detailed assessment of the impact of this policy.

The rise in rents in Paris has been one of the fastest among major European cities over the past twenty years, leading to growing difficulties for middle- and low-income residents. The reintroduction of controls in 2019 aimed to cap rents on the basis of the reference rents set by the Observatoire des Loyers de l'Agglomération Parisienne (OLAP, the Paris area rent observatory).

01Background and methodology

The scheme was introduced following the 2014 ALUR Act. After a first attempt between 2015 and 2017, annulled by the administrative court, it was reintroduced in 2019 as an experiment extended until 2026. In Berlin, the “Mietendeckel” was struck down in 2021 by the Federal Constitutional Court, leaving tenants in legal uncertainty: the Paris authorities drew lessons from these experiences to strengthen the legal framework.

The assessment of the effects uses a causal inference method (difference-in-differences), comparing the change in rents in Paris with that of similar cities not subject to rent control, such as Toulouse or Nice. The data come mainly from SeLoger listings and OLAP leases.

02Results: a real moderation of rents

Rent control has indeed led to a notable reduction in increases. According to OLAP, the average rent for private rental housing in Paris was €24.70/m² on 1 January 2023. During 2022, rents in the private sector rose by an average of 2.5%, compared with increases of 5 to 10% a year between 2001 and 2013.

The effect is particularly marked for small units: for dwellings of less than 18 m², the reduction in rent increases reaches 10.2%; between 18 and 24 m², 6.3%; between 24 and 40 m², 4.9%; above 100 m², the effect remains moderate but significant at 2.6%.

03Compliance and monitoring

Around 40% of rental listings exceed the upper reference rent, with particularly high non-compliance for furnished lettings (48.2%) compared with unfurnished ones (29.3%). Rents for furnished lettings are on average 10 to 15% higher, and compliance with the caps is lower in the central arrondissements and in districts popular with expatriates and foreign students.

It must also be acknowledged that strong state intervention in the market can produce perverse effects: strict regulation can discourage private investment and construction. The high level of non-compliance can be read as a response to rigid policies.

04Implications for investors

Rent control initially raised concerns among investors, who feared lower yields. The stability brought by regulation has, however, gradually attracted investors seeking predictable returns. Case studies from Vienna and New York show that well-designed regulation can coexist with a dynamic market: in Vienna, strict rules maintain stable yields while guaranteeing affordability; in New York, policies are regularly adjusted to market dynamics.

International experience also shows that deregulation, combined with tax incentives, can stimulate investment and innovation. For Paris, a balanced approach seems essential: combining the stability offered by well-thought-out regulation with the flexibility of targeted incentives, for a market that is at once stable, affordable and attractive.