Material change (modification notable)

A modification notable (material change) is the first ground for déplafonnement (release of the renewal rent from the statutory cap) under a bail commercial (French commercial lease). It refers to a change, occurring during the expired lease, affecting one of the first four factors of rental value: the characteristics of the premises, the permitted use, the respective obligations of the parties, and local commercial factors. The fifth factor, the prices commonly charged in the neighbourhood, is excluded: a mere rise in the market is never enough to uncap the rent.

Two conditions apply together. The change must be material, that is, of sufficient scale, and it must be of relevance to the business carried on: the case law requires that it be of a nature to have a favourable effect on the tenant’s activity, without it being necessary to prove that turnover has actually increased.

Where the rule comes from

Article L. 145-34, first paragraph, of the French Commercial Code reserves capping for the case where there is no material change in the factors listed in 1° to 4° of article L. 145-33. Articles R. 145-3 to R. 145-8 detail those factors: floor area, volume, state of repair and fittings for the characteristics; authorised activities for the permitted use; allocation of charges and works for the obligations; the attraction of the town, the district, the street and public transport for commercial factors.

Two reported decisions of 2025 (appeal nos. 23-14.887 and 24-13.288) clarified that the change in local factors must be “of a nature to” benefit the business, and that a new charge imposed by law on the landlord, such as compulsory insurance, does not amount to a change in the parties’ obligations.

In a valuation report

I describe the facts relied on, with their date and their evidence: building permit, plans before and after, amendment changing the permitted use, population or footfall statistics, opening of a piece of infrastructure. I explain how those facts concern the business carried on, without taking the judge’s place on the legal characterisation. I then quantify the renewal rental value for the case where uncapping is allowed, and the capped rent for the opposite case.

This double calculation is useful: it shows the financial stakes of the debate and allows the parties to settle with full knowledge of the facts.

Example

A landlord relies on the merger, in 2018, of two neighbouring shops into a single unit of 150 m² instead of 90 m², authorised by an amendment to the lease. The floor area increased by two thirds, which is a material change in the characteristics of the premises. The capped rent for 2024 would be €24,000; I value the rental value of the merged unit at €39,000. If the judge upholds the ground, the rent will be set at €39,000, with smoothing of the increase.

Not to be confused with

Movements in neighbourhood prices, which do not allow uncapping, and uncapping on grounds of duration, which requires no change at all.