Understanding Rental Payment Guarantees

If you are looking for an apartment or home in Paris, one of the first questions you might hear is, “What type of guarantee can you provide?”  Even though your revenue justifies the rent you are willing to pay, landlords often request a form of rental payment guarantee.

There are many types of rental payment guarantees available, and the type or work contract you have will determine which guarantee may work for you.

Guarantee Loyer Impayé (GII)

With this guarantee, the landlord assumes the cost of the insurance policy against unpaid rent that is paid to the insurance company as a percentage of the rent. There is no cost incurred by the tenant to use this form.  To be eligible, the tenant must earn more than 3 times the monthly rent in net salary and hold an indefinite work contract, and most often without a probation period.

Visale (or Le Visa pour le Logement et L’emploi)  

In place since January 2016, this governmental guarantee is finally gaining in recognition by agencies and landlords. A Visale is designed for employees starting a new job who need housing despite a precarious work contract (such as a fixed or indefinite term, but still on probation) or workers and civil servants, under 30 years old, unconditional of the type of work contract. This type of guarantee is limited to rents under 1500€ (including building charges) in the Paris region and 1300€ in most other areas of  France.

Bank Guarantee

This 6- or 12-month bond works for individuals without a French work contract. In this case, a tenant places security funds in a sequestered account at a French bank for either the duration of the probation period or the duration of the rental. The tenant must provide proof of revenue either in or outside of France, in the form of salary, dividends or personal fortune. A landlord willing to accept a bank guarantee is also needed, as this type of bond takes 4 weeks to process.

Guarantor

This type of guarantee is used for rentals in all price ranges. A guarantor can be one individual or even several, or even a company. The same paperwork is required of the guarantor (when an individual) as of the tenant (tax declarations, pay slips, etc.) and the guarantor’s revenue must have been earned in France. The guarantee period can be limited in time or be valid for the duration of the rental.

Private Insurance Companies

Private insurance companies now offer renter’s insurance. To subscribe to this service, a rate of about 6% of annual rent is required. These insurance companies will cover tenants whose revenue falls outside of France, whereas other insurances companies will not. This is still a less costly option than a bank guarantee, but it is not available to everyone. Also note that this type of guarantee does not cover those working for public organizations, unfortunately.

Rest assured that guarantees are not always mandatory, but this may help you to understand the options available if asked.

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