Are you wondering what are the impacts of laws 887 and 1235 on real estate in Monaco? So let's come back to it in this article!
Monaco remains an absolutely privileged place: a haven of peace, an idyllic, secure setting, which includes many interesting activities, and a very favorable place to settle there in the long term.
The city is renowned for being of absolute serenity and calm, in addition to being very prosperous. Moreover, precisely, the Monegasque principality makes the capital of its many inhabitants benefit from specific and advantageous laws... This is particularly the case in real estate.
Let's take a look at laws 1235 and 887, and their impact on apartments in Monaco!
Update on the sectors of Monaco
Monaco is a principality that registers certain specificities in terms of segmentation and laws. Thus, a distinction must be made between the open sector, the public sector and the regulated sector.
It is this last sector that will bring under the specific laws (specific to tenants) its dwellings. This sector actually concerns old buildings.
That is to say, any apartment located in a building built before September 1, 1947 is subject to specific regulations that aim to protect the rights of tenants.
Thus, due to this legislation and the aging of buildings, the housing stock of the regulated sector tends to decrease over the years.
Monegasque real estate laws
Thus, since Monaco attracts large capital and a large number of real estate investors, the principality has put in place laws to protect its tenants. It is therefore an instrument of protection, but also of regulation of the market, in order to ensure affordable housing for its various residents...
Among these laws, we find Laws 887 and 1235. Do they drastically impact real estate purchase conditions? Do they lower the profitability of an investment? Do they sufficiently protect tenants? That's what we're going to see now.
The impact of Law 887
Law 887 serves to provide access to affordable housing for Monegasque residents. It makes it possible to guarantee access to housing, and not to be pushed out of the market by prices that are too high.
However, this law requires eligibility criteria. These criteria are to be resident of Monaco for a certain number of years, and to meet other financial parameters.
Finally, apartments subject to these laws are often passed down from generation to generation, since they are more difficult to "make profitable" in the eyes of the real estate market. They are sort of reserved apartments.
Major conditions of application and access to housing under Law 887
Law 887 applies to "old" buildings built before 1 September 1947. Apartments under this law may only be rented to Monegasque residents, to persons domiciled in Monaco for at least five years and exercising a professional activity for more than six months, or to persons working in Monaco for at least five years. The owner is also free to rent to his ascendants, descendants or spouse.
The impact of Law 1235
This law, on the other hand, will concern old buildings, in other words, mainly the regulated sector of the city. It also provides protection for tenants, guaranteeing that they cannot be evicted without any reason.
In addition to that, it also regulates rent increases to avoid increases that are too sudden and not anticipable. This law therefore makes it possible to guarantee moderate rents to people living in apartments subject to Law 1235.
Major conditions of application and access to housing under Law 1235
Law 1235 has a social vocation and applies to Monegasques as well as to "children of the country". Owners can only rent to persons registered as a protected person, which includes Monegasques, persons born to a Monegasque parent, and other specific categories. The lease contract is concluded for a period of 6 years and can be terminated by the tenant with three months' notice. The owner can terminate the contract under very specific conditions, such as the need for major work.
Rental conditions surrounding these laws
Under Law 887, the landlord must agree to rent the apartment for a minimum period of six years, but the tenant can terminate the contract each year with three months' notice. As far as Bill 1235 is concerned, the lease is also for six years, but it offers better protection to the tenant. The landlord can only terminate the contract under very specific conditions, and the tenant can leave at any time during the 6-month notice period without owing additional rent.
Important clarification: when an apartment is put back on the market, the rent can be reassessed according to current market conditions!
>>> If you are looking to buy or rent an apartment in Monaco, click on this link!