Courtesy of Mish.
The economic stupidities in France keep piling up. Reader “AC” who lives in France writes:
Hi Mish,
I saw you covered some of the latest crazy things happened in France recently: actually there is much more. Let me give you a short digest of the craziest things.
Government wants to address the high cost and low availability of apartments to rent, especially in Paris.
After passing a law regulating the rent increase (the increase an owner can ask to a new person renting his apartment with regard to the rent of the former occupant), Cécile Duflot, the Minister of Territorial Equality and Housing, decided to go a big step further: government will fix the price of the lease.
The proposed law (and most likely going to be approved), will impose 2 things:
Mandatory insurance for unpaid rent. The cost will be shared by the owner and the renter
For new rental contracts, the owner will have to stay in a band of +/- 20% of a reference price the government will set based on the average price per square meter in the area where the apartment is located.No matter what features the apartment has (or lack thereof), or its condition, government will fix the price.
Mandatory insurance seeks to address another chronic problem: owners are extremely concerned about people not paying rent, because the time it takes to get them out of the flat by a court can be very long (up to 2 years), and often in these cases the renters return the flat in poor state. Therefore landlords are extremely selective. Most likely, the mandatory insurance will compound the problem.
The craziest thing is the destruction of real, private, profitable jobs along with the creation of public subsidized, unprofitable jobs, in the middle of growing unemployment and falling GDP.
You have already written about the “Emplois d’Avenir”, government subsidies for jobs for not qualified people in the no-profit sector. And that is already crazy enough.
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