On renewal of a French commercial lease (bail commercial), the rent is in principle capped, unless one of the elements of rental value, which include the parties’ respective obligations, has materially changed. Can a charge imposed on the landlord by statute during the expired lease justify uncapping the rent (déplafonnement, the release of the renewal rent from the statutory cap) when the landlord was already bearing it voluntarily? In a reported decision of 23 January 2025 concerning the non-occupying co-owner’s insurance, the Third Civil Chamber of the Cour de cassation (the French supreme court for civil and commercial matters) holds that such a new statutory obligation must be taken into consideration.
The facts
A tenant held a commercial lease of premises owned by two landlords and located in a building subject to the co-ownership regime (copropriété). By extrajudicial notices of 9 and 10 December 2015, she applied for renewal of her lease, expiring on 30 December 2015. The landlords accepted the principle of renewal but claimed an uncapped rent; after serving a written statement (mémoire), they summoned the tenant before the commercial rent judge (juge des loyers commerciaux).
In a judgment of 9 February 2023, the Pau Court of Appeal set the rent of the renewed lease under the uncapping rules. Its reasoning, as reproduced in the appeal, took into account among other things the change in the premiums of the non-occupying owner’s civil liability insurance, “compulsory since 2014, voluntarily taken out beforehand” (translated from the French): the premium rose from €644 in 2007 to €1,046.90 in 2015, an increase of 62.56%. The court also found that the increase in the charges borne by the landlords under their statutory obligations had, taken together, reduced their rental income by 27.97% during the expired lease.
The tenant appealed. She argued that the insurance had been paid even before it became compulsory, so that the increase in the premium did not result from the law but, according to the appeal, “from the relationship between the owner and his insurer”.
The decision
The Cour de cassation dismissed the appeal (Cass. 3e civ., 23 January 2025, appeal no. 23-14.887, reported), giving specific reasons only in its answer to the argument based on the insurance; the other complaints were dismissed without specific reasons.
Having recalled that the cap under article L. 145-34, first paragraph, of the Commercial Code gives way where the elements listed at 1° to 4° of article L. 145-33 change materially, it stated that, under articles L. 145-33, 3°, and R. 145-8, “the respective obligations of the parties, arising from the law and generating charges for one or other party since the rent was last set, may be relied on by the party required to bear them”. It concluded that “the creation, during the expired lease, of a new statutory obligation on the landlord is an element to be taken into consideration in setting the rent of the commercial lease”.
It placed in that category the landlord’s obligation, “imposed by article 58 of Law no. 2014-366 of 24 March 2014 and now set out in article 9-1 of Law no. 65-557 of 10 July 1965 establishing the status of co-ownership of built property, to insure against the civil liability risks for which it must answer in its capacity as a non-occupying co-owner”.
Finally, it approved the Court of Appeal for holding that this new statutory charge had to be taken into account for the rent of the lease renewed in 2015, “it being irrelevant that this insurance had been voluntarily taken out beforehand”. Having found, within its own power to assess the facts, that the increase in charges due to the landlords’ statutory obligations amounted to a material change in the obligations of the parties, the Court of Appeal “correctly deduced from this that the rent of the renewed lease had to be set according to the uncapping rules”.
The decision thus settles two questions: a new statutory obligation on the landlord falls within the respective obligations of the parties, and an earlier voluntary subscription does not neutralise it. It sets no threshold, materiality being a matter for the trial judges (juges du fond, the courts that assess the facts), whose assessment the Cour de cassation does not review on this point, and does not detail the other statutory obligations retained. Local commercial factors, another case of material change, follow their own conditions, set out in the article on the decision of 18 September 2025.
What this changes for valuation
The landlord’s statutory charges belong in the file. The report lists the statutory obligations that arose between the last setting of the rent and the renewal, with their legal source, their date of entry into force and their cost, supported by documents. A voluntary expense that became compulsory during the expired lease is included; a mere management choice by the owner is not. A change in the respective obligations can also come from the parties themselves, as shown by the decision on a rent fixed by settlement during the lease.
The charge must still be borne by the landlord. The provisions recalled by the Court refer to “the party required to bear them”. The report therefore checks, from the lease clauses and service charge statements, that the charge relied on is not re-invoiced to the tenant.
Materiality is shown in figures. The Court of Appeal relied on a clear indicator: the 27.97% fall in the landlords’ rental income. Taken alone, the insurance premium rose by €402.90 between 2007 and 2015 (from €644 to €1,046.90); the decision does not say whether that rise would have been enough by itself. The report therefore gains from presenting all the statutory charges, each costed, then their effect on net rental income between the last rent setting and the renewal.
Uncapping does not set the rent. Once the principle is settled, market rental value remains to be established (Charte de l’expertise en évaluation immobilière, the French property valuation charter, 6th edition, November 2025, Title III, § 1.4; EVS 1 of the European Valuation Standards 2025) from rent references reduced to a weighted floor area. Since the Court makes the new obligation an element to be taken into consideration in setting the rent, the report explains how it weighs in the value retained. Lastly, where uncapping results from a material change, the increase is in principle limited, for any one year, to 10% of the rent paid in the previous year (article L. 145-34, last paragraph), on the terms clarified by the Cour de cassation’s 2018 opinion (avis) on smoothing.
What the valuer takes from it
- A new statutory obligation on the landlord, created during the expired lease, may justify uncapping, even if the landlord already bore it voluntarily.
- Materiality is for the trial judges; the report demonstrates it through the cumulative cost of the statutory charges and their effect on rental income.
- The report checks that the charge relied on is not re-invoiced to the tenant.
- Once uncapping is settled, rental value remains to be established from references, and the increase is in principle smoothed.
Further reading
The Commercial rent and leases page describes the assignment and its fee. The guide Lease renewal in France: my landlord wants to uncap the rent and the glossary entries rent uncapping, material change and capped rent complement this article. The other 2025 decision on material change is discussed in Local commercial factors: a potential effect on trade is enough. On the same theme: Commercial rent uncapping in France: four ways out of the cap and Rent uncapping: a rent fixed by settlement is enough on its own. The decision is available on Légifrance.
What next
Is a commercial lease renewal coming up, with the landlord relying on new charges?
Landlord or tenant, I list the statutory obligations that arose during the expired lease, cost them and measure their effect on rental income. The report then establishes the rental value with verifiable references.
Free quote, by email or by phone. No commitment before the quote is accepted. Fees are never linked to the value of the property (Charte de l’expertise, Title I, §2.1).
