The benefits of a furnished rental

1/ The furnished rental market in Paris

There are about 100,000 furnished apartments in Paris. These apartments belong to private real estate investors who have made a buy-to-let investment to rent it out furnished.

- 50% of owners choose long-term rental

- 50% of owners opt for seasonal rental (this number seems to be dropping because of the regulation on vacation rental)

- 53% of furnished apartments with a surface area of less than 40 sq.m (430 sq.ft) are located in Paris’ 1st, 2nd, 4th, 5th, 7th and 8th arrondissements.

Currently, there are over 10,000 vacant furnished apartments waiting to be rented out - roughly 10% of all furnished apartments in Paris.

At Book-A-Flat, our portfolio comprises 3,000 furnished apartments, that is about 3% of the Parisian rental market.

This gives you a clear idea of the Parisian furnished apartment market.

2/ Portrait of an investor in furnished rentals in Paris

Our portfolio includes 3,000 owners of furnished apartments in Paris:

- 42% are households in the Paris region, between the ages of 40 and 60, with a comfortable monthly income of over €6,000, who decided to make a buy-to-let investment with a property close to their home in Paris or the Paris region.

- 20% of owners live abroad: French expatriates for example. They purchase property ahead of time to plan for their return home or for their children's education.

Lastly, there are also foreign owners, mostly Europeans, from Italy, Switzerland, the UK, who invest in real estate as a financial investment.

For instance, Italians are the number 1 foreign owners of property in Paris. They mostly invest in the centre of Paris, in the Marais or Saint-Germain-des-Prés areas.

3/ Impact of the public health crisis on furnished rentals

Demand for rental property has dropped by 15% since the beginning of the Covid-19 crisis in March 2020.

The French and Parisian customer base is primarily the only one remaining: they account for 90% of current furnished apartment rentals in Paris, recording a slight year-on-year increase (+5%).

There was an exodus of foreign tenants from the capital during the health crisis, but they are slowly coming back as travel restrictions are being lifted. We have received a high number of phone calls so far in September 2021.

There are more furnished apartments available than renters, especially for small surface areas, such as studios or one-bedroom apartments, deserted by French and foreign students who preferred to stay in their home country or with their parents in the countryside.

This is the first time ever that we are seeing such a phenomenon in 16 years in business.

Finally, in the absence of foreign tourists, we are observing more and more apartments usually intended for seasonal rentals, back on the traditional long-term rental market.

There are more furnished apartments available on the market, with over 10,000 apartments advertised on the Se Loger property website.

Our agency, Book-A-Flat, currently has 400 furnished apartments available.

4/ Is the current trend pushing furnished apartment rent down in Paris?

Rents have been falling since the start of the public health crisis.

We observed an overall downward trend of 2.3% for furnished apartment rents over that same period.

But in certain arrondissements, we are noticing a 10 to 20% drop in rents for small surface areas and over 20 to 30% on large surface areas which fail to find a tenant.

In such circumstances, owners with loan payments would rather lower their rent than leave their apartment unoccupied for too long.

The tenant base comes from the Paris region and is aware of market prices as well as rent control for furnished apartments.

Tip: try to stay in line with rent control to rent out your property as fast as possible.

5/ Rent control: the current situation

Rent control has been re-applied in Paris since July 2019.

For furnished apartments, caps vary between €30 and €40 per square meter, depending on the area.

“Control” may sound off-putting to owners but we believe it regulates prices on the rental market and prevents excessive rent being charged by some owners.

The owner will not systematically lose out, since caps accurately reflect what’s happening on the market.

6/ Other cities that may be subject to rent control

On 1 March 2020, rent control came into force in Lille.
Bordeaux and Lyon, where rents have sky-rocketed, are officially being studied for future application, alongside 11 cities in the Greater Paris region: Arcueil, Cachan, Chevilly-Larue, Choisy-le-Roi, Gentilly, Ivry-sur-Seine, Le Kremlin-Bicêtre, Orly, Villeneuve-Saint-Georges, Villejuif and Vitry-sur-Seine.

7/ A bullish market for tenants?

Absolutely. This is the right time to rent a furnished apartment in Paris!

It is clear that people are looking for opportunities and have time to search for furnished apartments in Paris.

Traffic on our website is soaring by 60% compared to the same period in 2020.

Many Parisians moved after the first lockdown in May 2020.

80% of French people move by necessity: work, studies, breakup, etc.

Some do not mind offering low prices, especially for high-end apartments: the foreign high-end customer base has left and large surface areas have lost up to 50% of their value, even more than for small apartments.

8/ Tax benefits of renting a furnished apartment

There are three different types of buy-to-let investments to make:

• A traditional unfurnished rental
• A long-term furnished rental
• A seasonal rental

From a tax point of view:

Long-term furnished rentals are the only investment with tax exemption which allows you to offset the purchasing price of the property for 10 years thanks to the tax-free LMNP (non-professional rental of furnished property) scheme.

In an old, unfurnished apartment or seasonal rental in Paris, there is no tax incentive scheme because rents are too high.

As far as rents are concerned:

For a 40 sq.m (300 sq.ft) one-bedroom:

• €1,200 for an unfurnished apartment (€30/sq.m)
• €1,600 for a long-term furnished apartment (€40/sq.m) / 20 to 30% more expensive
• €2,500 for a seasonal rental

You might think that you’re renting at a much higher price but if you factor in what you pay for, such as cleaning / laundry service / electricity / Internet / gas / handover of the keys, this accounts for 30% of expenses, that is €750/month, hence a net rent of €1,750 instead of €2,500.

That is almost the same amount as a long-term furnished apartment. Let alone the time spent replying to requests and the many other problems encountered in a joint-ownership property.

Ultimately, you’d be better off opting for a long-term furnished apartment under the LMNP scheme rather than renting out an unfurnished apartment which is less profitable or renting out seasonally, which isn't profitable at all at the moment.

Moreover, you are not likely, or less likely to have to deal with unpaid rent than with an unfurnished apartment.

The only drawback is the change of tenant every other year for a long-term furnished apartment versus five years on average for an unfurnished apartment.

Besides, since the Covid-19 crisis, many properties that were previously rented seasonally are now part of our furnished rental offer: at least a hundred owners have been added to our agency’s portfolio.