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Paris landlords squeeze more space and rent out of tenants

Floriano Rescigno | E+ | Getty Images

Compact micro-apartments may be the latest answer to housing shortages, but some Parisian landlords have been accused of taking the trend to the extreme.

One tenant, Dominique—who asked that his full name be withheld—has sued his landlady for renting him a 1.56-square-meter (16-square-foot) apartment for 17 years after she defied a court order to rehouse him. He hopes to get awarded 25,000 euros ($33,828), the equivalent of 17 years' rent, plus damages.

His case, which is going through the French courts, is not isolated. Another lawsuit involves a single mother who was evicted from her four-square-meter apartment in January for falling behind on her 200 euros per month ($270) rent for three months. Her landlord told her via SMS that he had changed the locks to her apartment and that she had 24 hours to pick up her belongings, which he had put in trash bags and placed outside the closed door.

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The Abbé Pierre Foundation, a charity dealing with French housing issues, has helped in both cases, providing legal advice on the grounds that their clients' apartments and evictions were illegal.

French law states that a property must be at least 9 square meters and have a shower. It also prevents landlords from evicting tenants during the winter months, even if they haven't paid rent.

The foundation highlights a worrying trend in Paris' housing market. In its annual report, released in February, it said 90 percent of people living in the Paris region found it difficult to find a flat as rents continue to climb.

According to the Observatoire des Loyers de l'Agglomération de Paris, a group that monitors rents in the city, the median monthly rent at the beginning of 2013 was 1,097 euros ($1,434), a 3.3 percent increase from 2012, which was 3.2 percent higher than in 2011. This, despite flat economic growth and 11 percent unemployment in France.

In London, figures released in September by LSL Property Services show that rents had risen 4.8 percent year-on-year, to reach their second-highest levels since 2008, with the average rent standing at £1,126 ($1,805).

The Observatoire attributes the rise to the lack of new apartments being built but also the decreasing number of places to rent or buy coming into the market. It adds that rents are increased significantly between tenants, with an average increase in rent of 8.5 percent in the French capital.


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Fondation Abbé Pierre

With a 17 percent drop in transaction volume in the year to April 2013, the French residential real estate market has continued to slow but "the pricing adjustment is lagging" reported Axa Investment Management in an August report. And while most regions had registered a fall in price, Paris and Lyon bucked the trend and saw rise of 0.2 percent and 1.2 percent, respectively.

The French government has made moves to curb rent hikes by in August 2012 installing controls in over 40 cities, with Paris leading, "where abnormal tensions on the rental market have been observed" said Cécile Duflot, the minister for Territorial Equality and Housing.

The decree was renewed for a year in August 2013 and forbids landlords to inflate the rent of their properties between tenant or when extending the lease. The new rent price should then be calculated using the latest Rent Reference index figure, which is based on inflation.

Additional potential measures include the annual construction of 150,000 new social housing and the renovation of 120,000 as well as a law to cap rents.

For Samuel Mouchard, director of the Solidarity-Habitat service, a part of the Abbé Pierre Foundation which deals with advising and guiding people with sub-standard living accommodations in the Ile-de-France region the measures represent progress "but we need to go further, especially to allow the most disadvantaged to be protected," he said in a RTL interview on October 15.

(Read more: French business chief slams 2014 budget)

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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