This initiative, while understandable, will it be enough to lower rents and increase the housing supply?
Montpellier will strengthen controls on tourist rentals from 2025 onwards, thereby tightening its regulations.
👉 Here's what the regulatory tightening will entail: • Strengthened controls on furnished tourist accommodations: increased inspections, heavier sanctions for violations up to €100,000 in fines. • Enhanced declaration requirement, with stricter files and penalties for non-compliance. • More stringent oversight of changes in use, notably in the historic district. The stated will to redirect properties towards long-term rentals, in tense neighborhoods.
On paper, the idea is to limit Airbnb pressure on the traditional rental market, but the real impact will be mixed for us - for three major reasons that we elaborate on below.
🧮 A trio of constraints that regulation doesn't solve
1. Land remains structurally expensive
Even if Airbnb properties return to the rental market, this doesn't reduce land scarcity. Montpellier is a highly densified city with high per m² costs. As long as we don't build more or densify better, supply will remain under pressure.
2. Landlord risk, always present In traditional 1989 law rentals, eviction procedures are lengthy and owners often feel "disadvantaged" and in a weak position against dishonest tenants. With furnished tourist accommodations, the risk of illegal occupation is generally lower, as turnover is high. And in cases of proven illegal occupation, the accelerated prefectural procedure (48 hours) can apply.
But this doesn't eliminate all risks: deterioration, nuisances, unpaid miscellaneous fees remain potential issues.
3. Renovation dynamics hampered One of the "positive effects" not anticipated by Airbnb is that it encouraged upgrading of aging buildings, in the city center, sometimes in degraded or obsolete housing. When owners could hope for better returns in short-term rentals, they invested - which revalued the stock. By tightening regulation too much, this investment flow could slow down. With rising property taxes and rising construction costs (materials, labor), returns will inevitably decrease, thus attracting fewer investors.
💡 Strategies to maintain high returns by adapting the rental product The limitation on the number of seasonal accommodations in the real estate market is an opportunity for investors who could purchase properties in good condition to operate them as furnished rentals or "premium" co-living spaces. The rental market is transforming and tenants are often looking for more services, which also allow them to step outside the rent control framework.
At Alpaca Immobilier, we precisely guide our clients towards this type of optimization with a profitability study, renovation proposals, tax optimization (actual furnished rental with depreciation) and finally property management + high-performing rental guarantee insurance to provide maximum security to the owner.
Investing outside Montpellier proper For investors who wish to continue with Airbnb and other platforms or who are allergic to these regulatory constraints, it remains possible to invest near Montpellier in municipalities where the per m² price is lower to benefit from better rental returns - rents near the Hérault capital remaining high.
