Nestling between the sea and the mountains, Nice is a city where demand for holiday rentals is exploding, especially during the peak tourist season. In response to this property pressure, the municipality has introduced the Compulsory Compensation Act. This regulatory framework aims to balance the housing market and prevent a shortage of available accommodation for permanent residents.
What is the Compulsory Compensation Act?
The Compulsory Compensation Act is a measure adopted by several French cities, including Nice, to regulate the property market. It requires owners wishing to rent out their property as furnished accommodation for tourist purposes to compensate by providing alternative accommodation for their main residence. This policy ensures that the number of homes available to local residents is not reduced by the massive conversion to holiday lets.
Main aims of the law
One of the main objectives is to prevent the supply of residential accommodation in areas popular with tourists from being exhausted. The city is also seeking to maintain a certain quality of life for its residents. By obliging landlords to offer alternative accommodation as compensation, the municipality is ensuring that property prices and rents for permanent residents do not soar.
Implementation in Nice
In Nice, the regulation introduced by the compensation law is based on strict controls and ongoing monitoring. Landlords must declare each new furnished rental to the local council and provide proof of the compensation paid. This enables the local authorities to monitor movements in the property market and react quickly to any imbalances.
Who is affected by the compulsory offsetting law?
These regulations mainly apply to two types of property owner: those who rent out their second home and those who convert their main home into a seasonal rental for more than 120 days a year. First-time investors or owners of several properties need to be particularly vigilant with regard to these legal requirements to avoid severe penalties.
Owners of second homes
For owners of second homes, the law requires them to find an equivalent compensation system if the property is let for short periods. Without this compensation mechanism, they risk heavy fines and may have their rental rights suspended. In some cases, the local council may even order the property to be returned to residential use.
Main dwellings used for tourist purposes
If an owner decides to rent out his main residence for more than 120 days a year for short stays, he must also comply with the compensation rule. This means that they must offer another dwelling of similar size and characteristics on the traditional rental market to compensate for the loss of availability of their main property.
Steps to comply with the law
Adapting to the compulsory compensation law requires a series of administrative and logistical steps. Landlords must follow a number of crucial steps to ensure that their actions are lawful.
Prior declaration
First and foremost, any plans to rent furnished accommodation on a seasonal basis must be declared to the local council. This administrative procedure enables the local authorities to identify the accommodation concerned and check that it complies with the conditions for compensation. A registration number is then assigned to the accommodation, which must be mentioned in all rental advertisements.
Implementation of compensation
Once the declaration has been made, the landlord must prove that he is offering adequate compensation. This generally involves putting another property on the rental market of a type equivalent to that rented on a seasonal basis. Each file must include documented evidence such as long-term leases or verifiable rental contracts.
Monitoring and control
The municipal authorities carry out regular monitoring to ensure compliance with the rules in force. Landlords are often subject to surprise or planned inspections to confirm the reality of the declarations made. Any proven failure to comply may result in immediate penalties in the form of fines or even suspension of rental rights.
Penalties and risks in the event of non-compliance
Failure to comply with the compensation law can have serious consequences for recalcitrant landlords. In Nice, penalties can range from heavy fines to administrative closure of the properties concerned.
Financial penalties
The municipal authorities have extensive powers to impose substantial fines on offenders. The amounts vary according to the seriousness of the offence, and can reach several thousand euros. These fines are used to deter illegal practices and fund control mechanisms.
Administrative closure
In the most extreme cases, the local council may order the cessation of the seasonal furnished-rental business. This radical decision is generally taken after repeated warnings and unsuccessful attempts to bring the property into compliance. The property in question will then have to return to normal residential use.
Advantages and disadvantages of the law for the various stakeholders
Any regulation has advantages and disadvantages depending on the perspective of each player involved. The application of the compensation law in Nice is no exception to this rule.
For property owners
For landowners, the law introduces additional constraints and potentially high costs associated with the implementation of compensation systems. However, it also ensures a healthier rental market and prevents saturation of the seasonal supply, which can stabilise the income generated by temporary rentals.
For tenants
For long-term tenants, the Compensation Act guarantees the availability of affordable accommodation. It also protects against the explosion in prices caused by an insufficient supply of conventional accommodation. However, tenants may sometimes experience rent increases indirectly caused by additional charges borne by landlords.
For the community
On a collective level, this measure contributes to more sustainable and harmonious urban development. It limits the social and economic imbalances caused by an excessive proportion of accommodation dedicated to tourists. It is therefore a proactive approach that promotes a balance between the needs of visitors and those of permanent residents.
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