Published on: 27 July 2023
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Rent shield: it is being extended until March 2024!
The rent shield was introduced with the "purchasing power" law of August 16, 2022. This measure, which was supposed to be temporary and expire on June 30, 2023, has just been extended until March 2024 to protect French households and businesses from an inflation-driven rise in rent prices. Despite inflation of 5.4% in June 2023 compared with June 2022 according to INSEE, the 2024 rent shield scheme therefore caps rent increases.
What is the rent shield? Reminder
Before we dive into the extension of the rent shield to 2024, let's recall what this measure consists of. This is a ceiling provided for by law to temporarily limit the increase in the rent reference index (IRL) and the commercial rent index (ILC). These indices are used as the basis for annual rent reviews.
As a result, the rent shield caps annual rent increases at 3.5%. In other words, rents cannot increase by more than 3.5% during the period of validity of the rent shield.
In residential rental contracts, a clause stipulates that a landlord can increase rent in the same proportions as the IRL or ILC. These indices are set quarterly by INSEE to take account of inflation.
The rent shield reduces the impact of this same inflation on rent increases, so that housing remains accessible to all. Note that this is not a rent freeze, but rather a cap on the rate of rent revision.
What should we remember about the bill extending the rent shield until March 2024?
Rent indexation capped at 3.5%
To cap rent increases, the rent shield limits revisions made from the 3rd quarter of 2022 to the 2nd quarter of 2023 to the following percentages:
- 3.5% in mainland France ;
- 2% in Corsica ;
- 2.5% in the French overseas territories.
This means that landlords cannot increase their tenants' rents beyond these percentages until March 2024. Even with an annual rent review clause, rents can only increase by a maximum of 3.5%. The rent reference index (IRL) is used as a basis for empty or furnished accommodation, while the commercial rent index (ICL) is for business and office rentals.
An increase in housing subsidies
To help the French cope with rising prices, the rent-shield measure has been accompanied by an increase in housing subsidies. The August 16, 2022 law on emergency measures to protect purchasing power has raised housing benefits (APL, ALF and ALS) by 3.5%. This increase is retroactive to July 1, 2022.
You don't need to take any action to benefit from this increase: everything is automatically taken care of during the payment of these benefits by the Caisse d'allocations familiales (CAF). We advise you to carry out an online simulation if you want to know the amount of aid to which you are entitled.
Bouclier loyer 2024: what you need to remember
With inflation running at over 5%, the rent shield helps preserve French purchasing power and prevent rents from skyrocketing. Although this measure is not necessarily unanimously endorsed by landlords, the 3.5% cap on the IRL and ICL has been extended unchanged until March 2024. So take this into account if you want to use the revision clause to increase rents in 2023 and 2024 during a lease renewal! If you have any questions, contact our Studapart experts for advice on how to proceed.
What rent increase in 2023?
During the 1st quarter of 2023, the rise in the rent reference index cannot exceed 3.5% in mainland France, thanks to the rent shield (extended until 2024). The index stands at 138.61, with an annual increase of 3.49%.
Can I increase the rent at the end of the lease?
A landlord can only increase the rent if a review clause is included in the lease contract, and if the proposed rent remains below the reduced reference rent. Since August 24, 2022, it has no longer been possible to increase the rent on lease renewals for properties rated F or G in DPE (Diagnostic de Performance Energétique).