Rental value (valeur locative)

Rental value is to rent what market value is to price. The Charte de l’expertise en évaluation immobilière (the French property valuation charter) defines it as the amount for which a property could reasonably be let at the time of the valuation, under a new lease, on the usual occupation terms for the category of building concerned. It assumes the free will of tenant and landlord, prior exposure of the property to the market, the absence of any personal convenience and a balanced relationship between tenant and landlord. It is expressed excluding VAT and recharged service charges.

The term also refers, in French commercial lease law, to the concept in article L. 145-33 of the Commercial Code, used to fix the reviewed or renewed rent. The two concepts overlap without being identical: the “judicial” rental value is determined from five factors (characteristics of the premises, permitted use, obligations of the parties, local commercial factors, prices charged in the neighbourhood), and it may depart from market rent to take account of the terms of the current lease.

Where the rule comes from

The professional definition appears in Title III, § 1.4 of the Charte, and § 1.6 deals with the renewal rental value, specific to commercial leases. The EVS 2025 define market rent in EVS 1, § 3.4, as a mirror of market value. The French Commercial Code, in article L. 145-33, lists the factors of the rental value of commercial leases, specified by articles R. 145-2 to R. 145-8.

In a valuation report

I describe the premises, measure the floor area, weight it if it is a shop, then look for comparable new lettings (rents actually paid, including any key money). I specify the type of rental value sought: market rent for vacant premises, or renewal rental value for a commercial lease, with the deductions linked to the terms of the lease. The report states the annual rent excluding VAT and service charges, as a range and then as a single figure, and relates it to the weighted m² to allow comparison.

Example

A town-centre shop of 65 m² on the ground floor, of which 45 m² of front sales area and 20 m² of storage, that is 55 weighted m². Four new lettings in the same street, after adjustment, give €320 to €380 per weighted m² per year. I adopt €350 per weighted m², a market rental value of €19,250 a year excluding VAT and service charges. The current rent, set nine years earlier, is €14,000: the gap feeds the discussion on renewal, subject to the capping rules.

Not to be confused with

The headline rent is the one written in the lease; the economic rent deducts the concessions granted (rent-free period, works). The occupation indemnity is owed after the end of the lease. The cadastral rental value, purely administrative, is used to calculate property tax and has no link to the market.