Jeff Steiner interviews Adrian Leeds re Paris short-term rentals.
Mar 5th, 2015, 04:02 PM
#1
Jeff Steiner interviews Adrian Leeds re Paris short-term rentals.
Jeff Steiner, of http://www.americansinfrance.net, interviewed Adrian Leeds recently, an American living in Paris, regarding the legal issues of banning rentals in the city of under a year. You may have seen her on HGTV's House Hunters International. Toward the end of the interview she mentions the Mayor of Paris, Anne Hidalgo, feting Airbnb founder, Brian Chesky, for his entrepreneurial spirit while at the same time working to ban the business from operating in the city.
See the interview here:
http://www.americansinfrance.net/Dai...rian-Leeds.cfm
See the interview here:
http://www.americansinfrance.net/Dai...rian-Leeds.cfm
Mar 5th, 2015, 04:30 PM
#2
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It's good that people have more clarification of the present state of the law and its enforcement.
As Adrian Leeds explains, Paris authorities are enforcing the law that says that short-term vacation apartment rentals are illegal in Paris unless the apartment is the primary residence of the landlord.
It is important to note that while Adrian Leeds believes that Paris authorities are acting "unconstitutionally", she is not filing a lawsuit to challenge the law. Instead, she is asking people to sing a political petition. Whether the law is ultimately changed through politics is unknown (although it seems unlikely that the mayor of a city would put the needs of tourists ahead of residents). What is important is to understand that the law and its chief enforcer (the mayor) outlaw short-term rentals, and thus booking a rental apartment in Paris runs the risk of abrupt cancellation before you arrive, with no notice.
In case people don't know, Adrian Leeds is an American real estate broker who has encouraged foreigners to buy Paris properties with the idea that they could rent them to tourists to offset the cost. So the issue for her is not whether you might rent an apartment in Paris only to have it pulled off the market because of it being an illegal rental. Her main interest has always been protecting the position of absentee landlords.
Regarding the creators of AirBnB, it is true that they have a very devoted following of fans who believe in the "share economy." To them, AirBnB are heroes and they are very upset when people point out that in many places, AirBnB is operating illegally. AirnBnB works very well in Italy and some other places, but in Paris or New York they are breaking the law. It is quite understandable to me that the mayor of Paris would make it clear she has nothing against the owners of AirBnb personally even though it is her obligation to not allow them to operate in Paris for the sake of residents of Paris (not tourists).
As Adrian Leeds explains, Paris authorities are enforcing the law that says that short-term vacation apartment rentals are illegal in Paris unless the apartment is the primary residence of the landlord.
It is important to note that while Adrian Leeds believes that Paris authorities are acting "unconstitutionally", she is not filing a lawsuit to challenge the law. Instead, she is asking people to sing a political petition. Whether the law is ultimately changed through politics is unknown (although it seems unlikely that the mayor of a city would put the needs of tourists ahead of residents). What is important is to understand that the law and its chief enforcer (the mayor) outlaw short-term rentals, and thus booking a rental apartment in Paris runs the risk of abrupt cancellation before you arrive, with no notice.
In case people don't know, Adrian Leeds is an American real estate broker who has encouraged foreigners to buy Paris properties with the idea that they could rent them to tourists to offset the cost. So the issue for her is not whether you might rent an apartment in Paris only to have it pulled off the market because of it being an illegal rental. Her main interest has always been protecting the position of absentee landlords.
Regarding the creators of AirBnB, it is true that they have a very devoted following of fans who believe in the "share economy." To them, AirBnB are heroes and they are very upset when people point out that in many places, AirBnB is operating illegally. AirnBnB works very well in Italy and some other places, but in Paris or New York they are breaking the law. It is quite understandable to me that the mayor of Paris would make it clear she has nothing against the owners of AirBnb personally even though it is her obligation to not allow them to operate in Paris for the sake of residents of Paris (not tourists).
Mar 5th, 2015, 04:36 PM
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If you want to sign Adrian Leeds' petition, you can do so here.
http://adrianleeds.com/parler-paris/...tmpl=component
Even if you don't want to sign, it is worth your while to read her explanation of the petition because, again, she makes it very plain that law enforcement is driving landlords underground to rent their apartments illegally. Morals aside, people need to realize that booking a rental apartment in Paris now entails more risk of sudden cancellation than it did before, creating the possibility you may be left scrambling for a place to stay after you thought you had that settled.
http://adrianleeds.com/parler-paris/...tmpl=component
Even if you don't want to sign, it is worth your while to read her explanation of the petition because, again, she makes it very plain that law enforcement is driving landlords underground to rent their apartments illegally. Morals aside, people need to realize that booking a rental apartment in Paris now entails more risk of sudden cancellation than it did before, creating the possibility you may be left scrambling for a place to stay after you thought you had that settled.
Mar 5th, 2015, 05:01 PM
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By the way, I think Adrian Leed's theories on the French constitution are irrelevant to people trying to plan a trip to Paris, but in case anybody wants to discuss it, I would be very surprised if the French constitution enshrines an automatic "right" to live anywhere in France for less than a year without any regulation from the government.
Leeds' contention that by outlawing AirBnb type schemes, the mayor of Paris is unconstutionally depriving human beings of their "rights" to live in Paris short-term is nonsense on the face of it (which is probably why she is circulating a petition rather than filing a lawsuit). If you want to live in Paris short-term you can rent a hotel room, rent a room in someone's home or rent a Citadines apartment.
For what it is worth, I have lived in American suburbs where home owners were not allowed under local zoning laws to rent out their homes. The neighborhood was not zoned for rentals. It was also not allowed to rent a part of one's home in areas not zoned for multi-family dwelling. While the US constitution is not identical to the French constitution, it would be pretty surprising if the French constitution prevented local governments from regulating housing rentals.
Leeds' contention that by outlawing AirBnb type schemes, the mayor of Paris is unconstutionally depriving human beings of their "rights" to live in Paris short-term is nonsense on the face of it (which is probably why she is circulating a petition rather than filing a lawsuit). If you want to live in Paris short-term you can rent a hotel room, rent a room in someone's home or rent a Citadines apartment.
For what it is worth, I have lived in American suburbs where home owners were not allowed under local zoning laws to rent out their homes. The neighborhood was not zoned for rentals. It was also not allowed to rent a part of one's home in areas not zoned for multi-family dwelling. While the US constitution is not identical to the French constitution, it would be pretty surprising if the French constitution prevented local governments from regulating housing rentals.
Mar 5th, 2015, 05:35 PM
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I googled up the news stories about the AirBnb founder, Brian Chesky, in Paris, and it needs some clarification.
AirBnb was "feted" in Paris for promising to abide by the law that forbids rental of absentee landord apartments to tourists. They promised to crack down on advertising apartmens where the owner only pretended to live there, and to not advertise apartments that were owned by absent investors. Plus, they promised to pay hotel taxes.
Paris is not trying to "ban" AirBnb from operating legally in the city. But it is trying to ban all the foreign investment apartments being used as tourist hotels.
Up until now, many AirBnB apartments for Paris advertised online were being offered for booking 365 days per year -- obviously no Parisian was living there. Presumably, if AirBnb is intendeing to be a lawful operator in Paris, they will remove those listings.
AirBnb was "feted" in Paris for promising to abide by the law that forbids rental of absentee landord apartments to tourists. They promised to crack down on advertising apartmens where the owner only pretended to live there, and to not advertise apartments that were owned by absent investors. Plus, they promised to pay hotel taxes.
Paris is not trying to "ban" AirBnb from operating legally in the city. But it is trying to ban all the foreign investment apartments being used as tourist hotels.
Up until now, many AirBnB apartments for Paris advertised online were being offered for booking 365 days per year -- obviously no Parisian was living there. Presumably, if AirBnb is intendeing to be a lawful operator in Paris, they will remove those listings.
Mar 5th, 2015, 06:04 PM
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Very interesting interview - thanks for posting it.
I am not an AirBnB fan and find it difficult to believe they will do any of the things they promised, but the law does help some AirBnB landlords (those that live in their apartments for 8 months a year, and rent 4.)
I feel for the agencies and landlords that have spent years building businesses and hope down the line there is a happy medium for vacation rentals in Paris. People staying as tourists in apartments would be happy to pay the tourist tax, and I am sure there are buildings where the other tenants don't care if other apartments in the building are rented to tourists.
It will be interesting to see what happens down the road. Again thanks for posting MmePerdu.
I am not an AirBnB fan and find it difficult to believe they will do any of the things they promised, but the law does help some AirBnB landlords (those that live in their apartments for 8 months a year, and rent 4.)
I feel for the agencies and landlords that have spent years building businesses and hope down the line there is a happy medium for vacation rentals in Paris. People staying as tourists in apartments would be happy to pay the tourist tax, and I am sure there are buildings where the other tenants don't care if other apartments in the building are rented to tourists.
It will be interesting to see what happens down the road. Again thanks for posting MmePerdu.
Mar 5th, 2015, 06:17 PM
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Wonder how much of sales of apts. in Paris are driven by short-term rentals.
That is, people buy these apts. with the plan to make them vacation rentals, to finance the purchase.
Bottom isn't going to fall out of the market there but it could lead to decreased sales.
The main and only beneficiaries will be hotels.
That is, people buy these apts. with the plan to make them vacation rentals, to finance the purchase.
Bottom isn't going to fall out of the market there but it could lead to decreased sales.
The main and only beneficiaries will be hotels.
Mar 5th, 2015, 11:49 PM
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The core objective with the law ALUR, which basically bans most short term apartment rentals, is to ease the shortage of affordable apartments for residents of Paris. The law includes incentives for owners/investors to expand rentals to residents and includes steps for owners/investors to maintain vacation rentals but only as the commercial properties which they really are.
Also part of the overall scope of ALUR is to respond to hotel interests who object to competition from those who are not commercially licensed and whose properties are not inspected and insured as hotels are. Hotels also offer employment opportunities which vacation rentals do not and governments always are looking for ways to employ residents.
There also have been problems with vacation apartment owners not paying lodging taxes and who have not paid taxes on the profits they make from these investments.
Finally, there are neighbors who object to the constant changeover in their buildings of strangers, many of whom are oblivious to the noise they can generate.
I think that it is important to keep in mind that Adrian Leeds represents her personal financial interests as well as those of The Adrian Leeds Group®. The vacation apartment rental situation in Paris involves many issues, not just those of someone wanting to sell rel estate and maintain rent revenues from investments which have been illegal for many years.
Also part of the overall scope of ALUR is to respond to hotel interests who object to competition from those who are not commercially licensed and whose properties are not inspected and insured as hotels are. Hotels also offer employment opportunities which vacation rentals do not and governments always are looking for ways to employ residents.
There also have been problems with vacation apartment owners not paying lodging taxes and who have not paid taxes on the profits they make from these investments.
Finally, there are neighbors who object to the constant changeover in their buildings of strangers, many of whom are oblivious to the noise they can generate.
I think that it is important to keep in mind that Adrian Leeds represents her personal financial interests as well as those of The Adrian Leeds Group®. The vacation apartment rental situation in Paris involves many issues, not just those of someone wanting to sell rel estate and maintain rent revenues from investments which have been illegal for many years.
Mar 6th, 2015, 03:54 AM
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scrb11,
It used to be that people joked about the Ile St Louis as being an American colony because so many Americans had bought pied-a-terres there as second homes, and they'd come for holidays. However, this was before the explosion of the internet, and cheap air fares, so there really wasn't a market for renting to tourists to off-set the mortgage, or use it for income. That has really changed in recent years.
It isn't only Paris, but also London and New York, that now have a huge number of foreign buyers coming into their housing markets as investments, but otherwise the apartment isn't being used. For many of the buyers -- Russians, Chinese, the Middle Eastern oil-rich -- they don't rent the apartments to tourists for security reasons. For some reason, in Paris, it became much more common for moderately affluent people to buy Parisian property with the idea that they would rent it out to tourists the majority of the time, through brokers who specialized in that, and only use it themselves once or twice a year.
It is still the case that if you live in Paris and want to go on vacation, or take a job in another city for part of the year, you can rent your apartment for the time you will be away. What you are not allowed to do is turn it into a hotel. You can also still buy property in Paris with the idea of renting it out to other people, part time or full time. But then you have to register as a commercial enterprise, and meet safety regs, pay taxes, etc.
It used to be that people joked about the Ile St Louis as being an American colony because so many Americans had bought pied-a-terres there as second homes, and they'd come for holidays. However, this was before the explosion of the internet, and cheap air fares, so there really wasn't a market for renting to tourists to off-set the mortgage, or use it for income. That has really changed in recent years.
It isn't only Paris, but also London and New York, that now have a huge number of foreign buyers coming into their housing markets as investments, but otherwise the apartment isn't being used. For many of the buyers -- Russians, Chinese, the Middle Eastern oil-rich -- they don't rent the apartments to tourists for security reasons. For some reason, in Paris, it became much more common for moderately affluent people to buy Parisian property with the idea that they would rent it out to tourists the majority of the time, through brokers who specialized in that, and only use it themselves once or twice a year.
It is still the case that if you live in Paris and want to go on vacation, or take a job in another city for part of the year, you can rent your apartment for the time you will be away. What you are not allowed to do is turn it into a hotel. You can also still buy property in Paris with the idea of renting it out to other people, part time or full time. But then you have to register as a commercial enterprise, and meet safety regs, pay taxes, etc.
Mar 6th, 2015, 04:34 AM
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Do you know what the 'air' in AirBnB is for? It's for 'air mattress'. The original concept of the company was to put an air mattress in your living room and rent it out to people visiting your city for a conference or other event when hotel rooms were in short supply. You provided a service to people who needed a place to stay and made a few bucks for yourself. It expanded to people renting out a spare room occasionally - like most B&Bs do.
But in many cities like Paris and NY it is now the OPPOSITE of that kind of business concept. It is now multi millionaires buying up properties for investment purposes. They are taking hundreds of properties out of the rental market in cities where finding reasonably priced apartments is difficult at best - making it really hard for people who live there. They are bypassing safety regulations and taxes hurting both the renters and the population of the city who have to make up the difference with higher taxes for everyone else.
You have to wonder about the integrity of the guys who started the company. Did the prospect of making themselves billionaires obliterate the good intentions they must have had when they started the company. The original concept is still a great idea for both the apartment/home owners who get to make a few dollars and the tourists who get more choice/better price of accommodations when traveling. I wonder if it will ever get back to that.
But in many cities like Paris and NY it is now the OPPOSITE of that kind of business concept. It is now multi millionaires buying up properties for investment purposes. They are taking hundreds of properties out of the rental market in cities where finding reasonably priced apartments is difficult at best - making it really hard for people who live there. They are bypassing safety regulations and taxes hurting both the renters and the population of the city who have to make up the difference with higher taxes for everyone else.
You have to wonder about the integrity of the guys who started the company. Did the prospect of making themselves billionaires obliterate the good intentions they must have had when they started the company. The original concept is still a great idea for both the apartment/home owners who get to make a few dollars and the tourists who get more choice/better price of accommodations when traveling. I wonder if it will ever get back to that.
Mar 6th, 2015, 09:12 AM
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From the CEO of A La Carte Paris who, despite the current focus on enforcing the law, is still actively promoting apartment purchase as an investment to be paid for with short term rentals (which he believes to be legal):
http://www.alacarte-paris-apartments...est/invest-en/
http://alacarte-invest.com/site/en/rent-short-term/
It will certainly be interesting to see how this plays out over the next year or so. There are so many competing interests.
http://www.alacarte-paris-apartments...est/invest-en/
http://alacarte-invest.com/site/en/rent-short-term/
It will certainly be interesting to see how this plays out over the next year or so. There are so many competing interests.
Mar 6th, 2015, 09:35 AM
#13
Part of the interest for me is how cities are compromising to cope with the varying sides of the issue and changing commercial landscape. San Francisco, for instance, is not only the home of Airbnb, but had a law on the books that rentals of private housing for less than 30 days were illegal, period. The city decided that the tax issue was apparently most important overall, and tax is now added to Airbnb rental bills and collected by the company.
But Parisians seem to believe, if I gauge it correctly, that availability of housing at a fair price is most important. So I can imagine that some compromise will be agreed upon which will allow short-term rentals under certain circumstances.
But whatever happens anywhere, I believe it's enforcement in as uniform a way as possible that will make the issue palatable to a majority of citizens. The job of city governments will be to clarify or change existing law and then make enforcement as important as the law itself. I wonder whether politicians can stay the course in that regard.
But Parisians seem to believe, if I gauge it correctly, that availability of housing at a fair price is most important. So I can imagine that some compromise will be agreed upon which will allow short-term rentals under certain circumstances.
But whatever happens anywhere, I believe it's enforcement in as uniform a way as possible that will make the issue palatable to a majority of citizens. The job of city governments will be to clarify or change existing law and then make enforcement as important as the law itself. I wonder whether politicians can stay the course in that regard.
Mar 6th, 2015, 09:48 AM
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One of the interesting points that never seems to be discussed is the fact that part of the ALUR law will limit the amount that can be charged for a vacation rental - after the owner meets all criteria and his request for a permit to rent short-term is approved by the City.
According to ALUR, the owner will not be allowed to charge more than the "customary rental amount" - currently, this is set at around 600 EU per month for an apartment measuring about 50 square meters. Since most vacation rentals charge more than this per week, it's highly doubtful that investment property owners will find this profitable, and will sell their apartments, rather than lose the massive profits they are used to making - usually tax-free.
In addition, the FATCA banking regulations which require transparency in all transactions are causing a great many investors to sell their rentals, rather than report and pay taxes on previously un-disclosed income. Anyone who rents an apartment and pays part - or even all - of the rental fee in cash is actually a participant in the owner's money-laundering scheme. Some people might want to consider that.
I do feel sorry for people who invested in pieds-a-terre in Paris with the idea of retiring here when they were able to. Unfortunately, their fantasy was much more important than getting reliable information about French real estate law and the regulations of a co-propriete.
The big explosion in rental properties came about in 2008, during the financial crisis when lots of people were forced to dump property. Most of the people able to purchase at this time were British, American and Italian - and most of the property that was sold is located in the Marais and Latin Quarter. The Russians, Arabs and Asians bought property a couple of years later, usually in areas like the 2eme, 8eme, 7eme, 16eme and 17eme - where the apartments are much larger and in better condition. Not much of this is used as short-term rental, though there are some luxury units available.
According to ALUR, the owner will not be allowed to charge more than the "customary rental amount" - currently, this is set at around 600 EU per month for an apartment measuring about 50 square meters. Since most vacation rentals charge more than this per week, it's highly doubtful that investment property owners will find this profitable, and will sell their apartments, rather than lose the massive profits they are used to making - usually tax-free.
In addition, the FATCA banking regulations which require transparency in all transactions are causing a great many investors to sell their rentals, rather than report and pay taxes on previously un-disclosed income. Anyone who rents an apartment and pays part - or even all - of the rental fee in cash is actually a participant in the owner's money-laundering scheme. Some people might want to consider that.
I do feel sorry for people who invested in pieds-a-terre in Paris with the idea of retiring here when they were able to. Unfortunately, their fantasy was much more important than getting reliable information about French real estate law and the regulations of a co-propriete.
The big explosion in rental properties came about in 2008, during the financial crisis when lots of people were forced to dump property. Most of the people able to purchase at this time were British, American and Italian - and most of the property that was sold is located in the Marais and Latin Quarter. The Russians, Arabs and Asians bought property a couple of years later, usually in areas like the 2eme, 8eme, 7eme, 16eme and 17eme - where the apartments are much larger and in better condition. Not much of this is used as short-term rental, though there are some luxury units available.
Mar 6th, 2015, 10:03 AM
#15
Presumably the law includes prohibitions against leasing of apartments, ostensibly for a personal residence for the proscribed tenure, a year, and then allowing "friends" use of the unit for short periods during the course of the lease. This brings me back to the enforcement issue and whether those in charge of enforcement will be serious in their mission to out the cheaters, who will always be with us.
Mar 6th, 2015, 10:08 AM
#16
Apparently Adrian Leeds has told people to sign fake one-year leases and break them on technicalities in order to get around the law. Frankly, this would make her a criminal if she cannot respect the laws of a country in which she lives.
Mar 6th, 2015, 12:27 PM
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<i>But Parisians seem to believe, if I gauge it correctly, that availability of housing at a fair price is most important. So I can imagine that some compromise will be agreed upon which will allow short-term rentals under certain circumstances.</i>
As I have pointed out earlier, there are various interests in play but I agree with MmePerdu that housing is the core issue behind the Mayor´s stance in reference to her aggressive steps against vacation apartment rentals.
There are provisions in the new laws for owners/investors to continue with short term rentals and primary residents may rent their apartments short term so there will continue to be apartments available.
However, the requirements necessary for owners/investors to be able to continue to rent their units short term will be, to be honest, almost impossible for most to meet. Some investors will be able to qualify their properties but I really do not see how non resident owners who rent their pied-a-terres to pay their mortgages will be able to continue with their current status quo, and that alone could represent a good number of the near 40,000 units that Airbnb says it lists in Paris.
As I have pointed out earlier, there are various interests in play but I agree with MmePerdu that housing is the core issue behind the Mayor´s stance in reference to her aggressive steps against vacation apartment rentals.
There are provisions in the new laws for owners/investors to continue with short term rentals and primary residents may rent their apartments short term so there will continue to be apartments available.
However, the requirements necessary for owners/investors to be able to continue to rent their units short term will be, to be honest, almost impossible for most to meet. Some investors will be able to qualify their properties but I really do not see how non resident owners who rent their pied-a-terres to pay their mortgages will be able to continue with their current status quo, and that alone could represent a good number of the near 40,000 units that Airbnb says it lists in Paris.
Mar 6th, 2015, 12:36 PM
#18
Those people are already allowed to rent their apartments for four months a year. In view of the enormous premium paid for vacation rentals, that is already as good as if they were renting their apartments at a normal rent long term. But that's not enough for them -- greed controls the market.
Mar 6th, 2015, 12:38 PM
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If the comparison is San Francisco and Paris, and the issue is how politicans behave, then look more closely at the overall dynamics.
The economy and property market of San Francisco is critically linked to the transient, fast moving nature of Silicon Valley. There is a huge demand for temporary housing of less than one year but longer than one week. There is also an historic culture of 20th c. San Francisco which diminishes property rights in favor of communal rights. However, there is also an extremely robust American tradition of "one's home is one's castle."\
Contrast that to Paris, which has an exceptional commitment to preserving its cultural identiy as the capital of France, and long tradition of valuing the urban center as "trophy property" for the elite, who are considered the guardians of Parisian identity. Add to that the long folkloric history of Paris as a place where immigrants are not "entitled" to entree into Parisian culture, but should be prepared to be willing to starve and sleep in unheated space to obtain it by virtue of genius and hard work.
The American idea that "fairness" should govern all business and public transactions is just that: an American idea. Americans find it moral, just and true. The French regard it as unwise and unwarranted, and a threat to the survival of French culture when the end result is entire blocks of the Marais or the 7eme being colonized by tourist rentals.
The idea that AirBnb will be able to operate in every country or city by the same set of rules is a pipe dream. In some cultures and real estate markets -- like Italy -- they are likely to have it quite easy. There is more vacant housing space in Italy than there is people to fill it. AirBnb is a godsend. In other places? It's against the public interest.
The economy and property market of San Francisco is critically linked to the transient, fast moving nature of Silicon Valley. There is a huge demand for temporary housing of less than one year but longer than one week. There is also an historic culture of 20th c. San Francisco which diminishes property rights in favor of communal rights. However, there is also an extremely robust American tradition of "one's home is one's castle."\
Contrast that to Paris, which has an exceptional commitment to preserving its cultural identiy as the capital of France, and long tradition of valuing the urban center as "trophy property" for the elite, who are considered the guardians of Parisian identity. Add to that the long folkloric history of Paris as a place where immigrants are not "entitled" to entree into Parisian culture, but should be prepared to be willing to starve and sleep in unheated space to obtain it by virtue of genius and hard work.
The American idea that "fairness" should govern all business and public transactions is just that: an American idea. Americans find it moral, just and true. The French regard it as unwise and unwarranted, and a threat to the survival of French culture when the end result is entire blocks of the Marais or the 7eme being colonized by tourist rentals.
The idea that AirBnb will be able to operate in every country or city by the same set of rules is a pipe dream. In some cultures and real estate markets -- like Italy -- they are likely to have it quite easy. There is more vacant housing space in Italy than there is people to fill it. AirBnb is a godsend. In other places? It's against the public interest.
Mar 6th, 2015, 12:47 PM
#20
Maybe this is the perfect opportunity for broker/developers to act on behalf of non-resident pied-a-terre owners, sell their properties and buy buildings for time shares. It seems much the same thing as using a single unit a few weeks a year, has advantages regarding maintenance and management. But are time shares allowed in Paris?
