Rental Permit (Art. L. 635-1 CCH): The Authorisation That Conditions the Usability of an Income-Producing Building

The acquisition of an income-producing residential building (immeuble de rapport) in Seine-Saint-Denis or Val-de-Marne is often negotiated on a headline yield calculated from a plan for the rapid re-letting of vacant units. That plan assumes that the landlord can sign a lease as soon as the sale is completed (réitération). In areas subject to prior authorisation for letting, that assumption is wrong: each new letting is subject to an administrative decision, the refusal of which may be conditional on unbudgeted works. The rental permit (permis de louer) is not a lettings management formality; it is a usability constraint that must be checked before signing and reflected in the price. This guide sets out the regime of Article L. 635-1 of the French Construction and Housing Code (CCH), its mapping in Paris and the inner suburbs (petite couronne), the applicable procedural timetable and the checkpoints to be built into acquisition due diligence.

Two distinct schemes arising from the ALUR Law: declaration and authorisation

Articles 92 and 93 of Law No. 2014-366 of 24 March 2014 on access to housing and renewed urban planning, known as the ALUR Law, created two regimes for controlling lettings, codified in Book VI of the French Construction and Housing Code. Their operational implementation dates from Decree No. 2016-1790 of 19 December 2016 on the regimes of declaration and prior authorisation for letting.

The first regime, that of the declaration of letting (Articles L. 634-1 et seq. of the CCH), is an a posteriori regime. The landlord declares the letting within fifteen days of the conclusion of the lease and receives an acknowledgement of receipt. The check is documentary and deferred; no decision conditions the signing of the lease.

The second, that of prior authorisation for letting (Articles L. 635-1 et seq. of the CCH), is an a priori regime. No lease may validly be preceded by the making available of the dwelling without an authorisation, express or tacit, issued by the competent authority. This second regime is what practitioners call the rental permit, and it is the only one that carries a timetable risk for an investor.

Confusion between the two is frequent in hastily drafted due diligence reports. It is costly: the declaration regime does not affect the date on which the lease takes effect, whereas the authorisation regime conditions it.

What Article L. 635-1 of the CCH exactly provides

The intercommunal public body (EPCI) with competence for housing, or failing that the municipal council, may by reasoned deliberation delimit zones subject to prior authorisation for letting, in areas with a significant proportion of substandard housing. The deliberation may target a sub-municipal perimeter, reduced to a few streets or a block, and may target certain categories of dwellings or certain property complexes, for example dwellings built before a given date or buildings that have been divided.

Two practical consequences follow. First, the rental permit never applies by default: it always results from an identifiable, enforceable and consultable local act. Second, its perimeter does not necessarily follow municipal boundaries, which rules out reasoning town by town and requires a check address by address.

The deliberation sets the date on which the scheme enters into force, which cannot be less than six months after its publication. That six-month period is the first marker in the decision timetable: an investor who signs a preliminary agreement in a municipality that has just deliberated may find itself subject to the regime between the preliminary agreement and completion.

Scope: which lettings trigger the obligation

The scheme covers the letting of a dwelling for use as a main residence. Three dividing lines structure the analysis of a portfolio.

First line: the new letting. Authorisation is required for each new letting, that is, each time a new tenant moves in. Renewal of the lease, its tacit extension and the signing of an amendment with the sitting tenant fall outside the regime. For an income-producing building, exposure is therefore measured by the turnover rate, not by the number of units.

Second line: the use. Seasonal lettings and tourist furnished lettings, which are not the tenant's main residence, fall outside the scope. Furnished lettings for use as a main residence fall within it, as does shared tenancy (colocation). A landlord who switches a unit from tourist furnished letting to long-term furnished letting, a frequent arbitrage since the tightening of the regulation of tourist furnished accommodation, brings that unit within the scope of the authorisation. The authorisations specific to short-term letting, from registration to change of use, are analysed in our article on the usability of a tourist furnished letting.

Third line: the statutory exclusions. Dwellings let by a social housing body and dwellings subject to an agreement with the State under the personalised housing aid scheme (aide personnalisée au logement) are excluded from the scheme. An asset held by a private investor but subject to such an agreement may therefore present a mixed profile, with some units subject to the regime and others not.

Mapping Paris and the inner suburbs: identifying the applicable perimeter

The map of the rental permit is shifting and cannot be read from a national map. In the inner suburbs, the intercommunal bodies of Seine-Saint-Denis are among the most engaged areas, with Plaine Commune and Est Ensemble having introduced the scheme over all or part of their territory, with perimeters and categories of dwellings varying according to the member municipalities. Several municipalities in Val-de-Marne and Hauts-de-Seine, as well as territorial public establishments of Greater Paris, have adopted comparable deliberations. Within Paris itself, the regime is not extended to the whole municipal territory, which does not remove the need for a check for a building located in a sector targeted by a scheme to combat substandard housing.

None of these situations can be presumed. The check follows an invariable method.

• Identify the competent authority: the EPCI or territorial public establishment with competence for housing, failing that the municipality.
• Obtain the deliberation itself, and not an information page on the municipal website, in order to read the exact perimeter, the categories of dwellings covered and the date of entry into force.
• Check whether there is a subsequent amending deliberation, extension or restriction of the perimeters being frequent.
• Have the housing department confirm in writing whether the address and, where relevant, the units concerned are subject to the scheme.
• Check whether the same deliberation has introduced, in parallel, a regime of prior authorisation for works dividing a property, known as the permis de diviser (division permit), the two tools often being deployed together over the same perimeters.

This check forms part of acquisition due diligence in the same way as the planning audit or the analysis of leases. It must be documented in the report, with the supporting document.

The decision timetable: which act triggers which time limit

The regime of Article L. 635-1 of the CCH is to be analysed as a sequence of time limits, control of which conditions the date on which the first rent is received.

Filing the application. The landlord, or its agent, files an application on the dedicated Cerfa form (No. 15652*01), accompanied by the technical diagnostic file. The application must be filed before the letting, and not at the same time as the lease is signed.

Examination. The competent authority has one month from receipt of the complete file in which to rule. Silence beyond that period amounts to tacit authorisation. That month adds mechanically to the time needed to market the unit: on an income-producing building with significant annual turnover, the cumulative effect on the occupancy rate is not neutral and must appear in the business plan.

The decision. Three outcomes are possible. Authorisation, express or tacit. Authorisation subject to requirements for works or alterations, the carrying out of which conditions the letting. Rejection, where the dwelling is liable to endanger the safety of the occupants or public health; the rejection is reasoned and specifies the nature of the works required.

Period of validity. The authorisation lapses if it is not followed by a letting within two years of its issue. An authorisation obtained by the seller with a view to a re-letting that never took place may therefore have expired by the date of completion.

Required for each re-letting. The authorisation is attached to a specific letting. It must be renewed for each new letting and accompany the lease agreement when it is concluded. An institutional landlord that re-let a unit on the basis of an authorisation issued for the previous tenant would be exposed to the penalty.

Transfer of the building. The code provides for the transfer of the authorisation, if still valid, to the new owner in the event of a transfer of ownership, the new owner being responsible for notifying the competent authority. The practical arrangements vary according to the examining departments, which justifies written confirmation before signing.

Penalties: administrative fine, fate of the lease and collection of rents

The administrative fine under Article L. 635-7 of the CCH

Letting a dwelling without having filed the application for prior authorisation exposes the landlord to an administrative fine imposed by the prefect, on the proposal of the mayor or the president of the EPCI, of a maximum amount of €5,000. In the event of a further breach within three years, the ceiling is raised to €15,000. Letting despite a decision of rejection is penalised outright by a fine of up to €15,000. The proceeds of these fines are allocated to the National Housing Agency (Agence nationale de l'habitat, ANAH).

Two features make this risk concrete for a multi-unit investor. The fine is imposed per dwelling, not per building: a portfolio re-let in disregard of the scheme produces a cumulative exposure. And repetition within three years triples the ceiling, which turns a process failure into a financial loss where it is systemic.

A lease concluded without authorisation is not void

A point that practice often overlooks: the absence of prior authorisation entails neither the nullity nor the termination of the lease. The text states this expressly. The tenant is lawfully in occupation, the lease takes effect, and rents and charges remain due in accordance with the terms of the contract.

Letting a dwelling without having filed the application for prior authorisation cannot result in the nullity or termination of the lease.

This civil-law security is real, but it is narrow. It protects the contractual relationship, not the cash flow. Three distinct mechanisms can affect the actual collection of rents, and none depends on the validity of the lease.

Housing benefits: the leakage point of rental cash flow

Payment of personal housing benefits is subject to the decency of the dwelling within the meaning of Decree No. 2002-120 of 30 January 2002. Where the paying body finds that the dwelling is not decent, it does not discontinue the benefit: it withholds it for a maximum period of eighteen months, while the landlord carries out the works, and the tenant then owes the landlord only the rent reduced by the amount of the benefit withheld. If the works are carried out within the period, the withheld benefit is paid to the landlord. Failing that, it is lost permanently.

The link with the rental permit is direct. A rejection of an application for authorisation, based on a risk to safety or health, constitutes a documented report on the condition of the dwelling, transmitted to the local bodies combating substandard housing. On a portfolio in which a significant share of the tenants receive benefits, which is frequent in inner-suburb income-producing buildings acquired at a discount, the withholding of the benefit cuts into the rent actually collected without the landlord having any claim against the tenant, who owes only the residual rent.

The switch to housing police powers: the second-order risk

The rental permit is not a housing police power; it is a detection mechanism. Its purpose for the local authority is to organise a visit and a report. Where that report reveals a serious defect, the authority switches to the unified police powers on building safety and public health, reorganised by Ordinance No. 2020-71 of 29 January 2020 and codified in Articles L. 511-1 et seq. of the CCH.

The effects then change in nature. An order dealing with unfit housing (insalubrité) or requiring safety works (mise en sécurité) entails, under the conditions of Articles L. 521-1 et seq. of the CCH, suspension of the rent from the first day of the month following notification of the order until the first day of the month following its lifting. To this are added the owner's obligation to provide accommodation or rehousing for the occupants, the administrative daily penalty (astreinte), the carrying out of works by the authority of its own motion at the owner's expense with registration of a special real property privilege (privilège spécial immobilier), and, in the most serious situations, criminal prosecution for subjecting persons to undignified accommodation conditions under Article 225-14 of the French Criminal Code, together with additional penalties which may include a ban on acquiring residential real property.

It is this chain, and not the €15,000 fine, that constitutes the real risk for an investor. Law No. 2024-322 of 9 April 2024 aimed at accelerating and simplifying the renovation of substandard housing confirmed the direction of travel: local authorities have faster and more coercive tools against owners of substandard housing.

Acquisition due diligence: checkpoints before signing

Audit of the let and vacant units

The exposure divides into two blocks. First, the existing leases: they are not called into question by an earlier absence of authorisation, but the buyer must know whether the seller has complied with its obligations, since penalty proceedings begun before the sale or a pending report may continue and reveal the condition of the building. Second, the vacant units: these carry the operational risk, since each re-letting will trigger an examination, with its one-month period and the uncertainty of requirements for works.

Particular attention must be paid to atypical units, which account for most refusals: reduced floor areas resulting from old divisions, former maids' rooms (chambres de service), basement or courtyard-level ground-floor dwellings, insufficient ceiling height, non-compliant electrical installations and ventilation. For these units, the prudent working assumption is not authorisation, but authorisation subject to requirements.

Interaction with earlier divisions

Income-producing buildings acquired at a discount in the inner suburbs have frequently undergone successive divisions, sometimes without authorisation where the municipality had introduced a division permit regime. Two regimes then overlap: the lawfulness of the division and the lawfulness of the letting. A unit resulting from an irregular division will have its authorisation for letting refused, which neutralises the yield shown for that unit. Checking the chain of works and division authorisations is therefore an integral part of the audit of the rental permit, and not a separate exercise. The discrepancies between the descriptive statement of division (état descriptif de division), the co-ownership rules (règlement de copropriété) and the actual use of the units, identified in due diligence, are the subject of our article on the descriptive statement of division and the co-ownership rules.

Contractual translation

The audit has value only if it is reflected in the deed. Several levers can be used depending on the outcome of the checks.

• A condition precedent of obtaining prior authorisations for letting for vacant units intended for immediate re-letting, where the timetable of the transaction allows it.
• A declaration by the seller on the existence, date and content of the authorisations obtained for existing leases, with delivery of the documents, and on the absence of any penalty proceedings, report or order in progress.
• A specific guarantee covering administrative fines and the consequences of a housing police order arising from a situation prior to the sale, backed where appropriate by an escrow.
• A price reduction quantified on the basis of the estimated cost of the works that may be required and the loss of rent from the delay in re-letting, rather than a mere statement of risk in an annex to the audit report.

Usability over time: building the rental permit into the business plan

The question is not whether the building can be let on the day of acquisition, but whether it will remain so on each turnover, throughout the holding period. This dynamic reading requires three trade-offs.

The first concerns capex. The requirements for works attached to an authorisation for letting add up, on the same asset, with the energy decency timetable arising from Article 160 of Law No. 2021-1104 of 22 August 2021 on combating climate change, which progressively prohibits the letting of the least efficient dwellings. An older income-producing building in the inner suburbs may be exposed simultaneously to an electrical safety requirement and an energy performance deadline. The works plan must be built unit by unit and sequenced on the dates on which the leases end, not on a building average. The timetable of energy obligations and their effects on the lettability of units are detailed in our article on the collective energy performance diagnostic (DPE collectif) and the energy audit.

The second concerns management. Where the letting is entrusted to a professional subject to Law No. 70-9 of 2 January 1970, known as the Hoguet Law, the mandate must expressly make the professional responsible for checking whether the address is subject to the scheme, filing the application and keeping the authorisations. The absence of an explicit clause leaves the exposure with the owner.

The third concerns internal process. A multi-asset landlord must have an up-to-date register of the addresses subject to the regime, a blocking checkpoint before any lease is signed and an archive of authorisations attached to the unit's file. In practice, the breach almost never results from a deliberate decision: it results from a quick re-letting carried out without anyone having checked that the address was within the perimeter.

Conclusion

The rental permit is treated, in too many audits, as an administrative formality relegated to the end of the report. That is an error of assessment. The scheme does not destroy the validity of leases, but it conditions the date of each re-letting, exposes the landlord to administrative fines incurred unit by unit and may lead the competent authority to bring into play the building safety and public health police powers. Checking it forms part of acquisition due diligence, in the same way as the planning audit, and its results must be reflected in the price, the conditions precedent and the guarantees in the deed.