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Housing in Réunion

Buying a Property

As in France, there are no restrictions on foreign ownership of properties.

Once the parties have agreed on the price and what the sale relates to, the parties will be required to sign a preliminary agreement.

The preliminary agreement usually takes the form of (in the north) an option (promesse unilatérale de vente), with a 5% to 10% penalty if the option is not exercised, usually secured by a deposit held by the notaire. There is a 7-day cooling-off period, in which the buyer can change his mind.

If a mortgage is being sought, the compromise de vente must contain a clause confirming that mortgage financing is being sought, then, if the mortgage is declined, the purchaser will not lose his deposit.

Once preliminary contracts have been exchanged, there are pre-completion searches: land registry searches, local authority searches, planning permission searches, etc. If the dwelling has been sold by a "property professional" or is less than 10 years old, the seller has a statutory liability to all future owners within the ten year period for defects.

On completion, the purchaser and vendor sign the acte authentique de vente at the notaire’s office. The notaire will see that the account is settled, will accept his fee, and land registry fees, if they are not included in the notaire’s fees.

Renting a Property

The contract (le bail) must be in writing. There are a number of obligatory clauses, and also forbidden clauses. The initial rent can be freely agreed between the owner and the renter. However, the rent can be revised only once a year, and only if a clause in the contract (carefully drafted) specifies it. The increase cannot be above the increase of the four-quarterly average of the INSEE index of construction costs.

Landlords take a deposit of two months rent (called un chèque de caution), which is returned at the end of the rental period subject to it being partially or totally used to rectify any damager. The first month’s rent is also paid in advance.

Estate agents (agences immobilières) usually charge both the new tenant and the property owner half a month’s rent, on signing a tenancy.

An unfurnished property contract has a minimum duration of three years (if the proprietor is a person), or six years (if the proprietor is a company or society).

The tenant is free to leave whenever he wishes, subject to two, or more commonly, three months' notice (reduced to one month if the tenant loses his job, is over 60 and in bad health, etc.). The landlord is not free to give such notice. Even when the contract ends, the owner can re-occupy the property if:

• he/she or a member of his/her immediate family intends to live there;
• he/she intends to sell;
• for another serious and legitimate reason.

Notice must always be given at least six months before the end of the contract.

At the end of the contract, if the owner wishes to renew but also to raise the rent, he must demonstrate that the rent is manifestly underneath the current standard for the area and for comparable residences, by furnishing nine examples, each with extensive details – exact addresses, surface areas, state of decoration, date of construction, time during which the residences have been rented, and rental amount. If the increase arrived at is more than 10%, it must be spread over six years, even if the contract is only for three years. If no agreement is reached, the owner must go the Departmental Conciliation Commission (a free service), and if that fails, to a judge.

In no cases can the initial deposit be increased.

If the property is sold, the tenant must always be given first refusal, i.e. be given the opportunity to buy the property, at the agreed selling price.

These restrictions on the owner's right to evict have been blamed for the overall reduction nationwide in the offer of rentals, a trend which began last year, which has particularly affected Paris.

Furnished property benefits from slightly different treatment. Again, there must be a written contract. The contract duration is for one year; at the contract’s end, it is automatically renewed, unless notice has been given by either side. The tenant can leave at any time, at a month’s notice.

The owner cannot re-occupy the property at the end of the contract, unless he gives three months’ notice and either intends to reoccupy or sell the apartment, or the tenant has failed to fulfil the contractual conditions.

That aside, furnished contracts are less regulated as concerns deposits, charges, the obligations of landlord and tenant, and the documents to be attached to the contract.





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