When a French commercial lease (bail commercial) is renewed, a rent released from the statutory cap (déplafonnement) moves to rental value, sometimes well above the rent paid until then. Since Law no. 2014-626 of 18 June 2014, the increase is phased in, in certain cases (lissage, smoothing): it may not exceed, for one year, 10% of the previous year’s rent. In a reported opinion of 9 March 2018, the Cour de cassation (the French supreme court for civil and commercial matters) states that the increase is 10% every year, with no adjustment, and that the schedule belongs to the parties, not to the commercial rent judge (juge des loyers commerciaux).
The facts
An opinion is not given on an appeal: a court may consult the Cour de cassation on a new question of law that raises a serious difficulty and arises in many cases (articles L. 441-1 et seq. of the Code of Judicial Organisation; the opinion still cites the former numbering, L. 151-1).
On 4 December 2017 the commercial rent judge of the Dieppe tribunal de grande instance (the former first-instance civil court), hearing proceedings between a couple and another person, made a request for an opinion, received on 18 December. It concerned the last paragraph of article L. 145-34 of the Commercial Code, which the request cited as follows: where there is a material change in the factors listed at 1° to 4° of article L. 145-33 (characteristics of the premises, permitted use, respective obligations of the parties, local trading factors), the resulting variation in rent may not lead to increases of more than 10%, for one year, of the rent paid during the previous year. The same paragraph also covers the case where a lease clause on its duration sets the cap aside, for example a lease granted for more than nine years.
The judge considered three readings: an annual rate agreed by the parties, which could be below 10%; automatic 10% steps; or a schedule set by the judge for each of the nine years following renewal. The request was examined at the session of 6 March 2018.
The decision
In an opinion of 9 March 2018 (Cass., opinion, no. 17-70.040, reported), the Cour de cassation stated: “The phasing of the increase of the uncapped rent provided for by the last paragraph of article L. 145-34 of the Commercial Code operates each year by a non-adjustable increase of 10% of the previous year’s rent.” And: “It is not within the office of the commercial rent judge, but within that of the parties, to draw up the schedule of the rents that will be payable during the period in which the phasing of the rent increase introduced by that text applies.” (translated from the French)
The reasons explain this division. The uncapped rent is set at rental value under article L. 145-33; the last paragraph of article L. 145-34 only introduces a phasing of the increase, without affecting that setting. Since this mechanism is distinct, the schedule is for the parties, the rent judge having jurisdiction only over disputes on the price of the revised or renewed lease. The 10% rate applies each year, except where the gap remaining up to rental value is smaller than that rate. Since the phasing is not a matter of public policy (ordre public), the parties may agree to set it aside.
The answer matches the second reading on the rate (automatic 10% steps), but the schedule is for the parties, who may also set the phasing aside.
An opinion does not bind the court that requested it (article L. 441-3 of the Code of Judicial Organisation). The Cour de cassation has since ruled the same way on appeal: in a reported decision of 25 January 2023 (Cass. 3e civ., no. 21-21.943), it held that the phasing, distinct from the setting of the rent, is not within the rent judge’s office. On 16 October 2025 (no. 23-23.834), it added that smoothing does not apply to a nine-year lease extended by tacit continuation beyond twelve years, as the article French commercial lease beyond twelve years: no rent smoothing explains. These decisions confirm the opinion or mark out the scope of smoothing without contradicting it: where smoothing applies, its terms remain those of 2018.
What this changes for valuation
Rental value is not reduced because of smoothing. The renewed rent is set at rental value, and phasing does not affect that setting. The report therefore establishes rental value by comparison, without reducing it because the tenant will only pay it after several years, then sets out the path of rents separately.
The schedule is a calculation. Take a last rent paid of €20,000 a year and a rental value set at €30,000. Excluding indexation, the rent payable is €22,000 in the first year, €24,200 in the second, €26,620 in the third, €29,282 in the fourth and €30,000 in the fifth, the last increase being limited to the remaining gap of €718. Over these five years the tenant pays €132,102 instead of €150,000. The report may attach this table as an annex, as an aid: it is the parties who settle it. The opinion says nothing about how phasing interacts with an indexation clause; the report points this out.
Smoothing weighs on other valuations. During the phasing, the rent paid remains below rental value. For premises valued on an income basis, the valuer uses the rents actually payable or deducts the discounted shortfall; for the tenant, this temporary gap enters the value of the leasehold right (droit au bail) or of the business, in proportion to its length.
First check that smoothing applies. It only applies in the two cases of the text set out above, for leases entered into or renewed since 1 September 2014 (article 21 of the Law of 18 June 2014). A lease extended by tacit continuation beyond twelve years is uncapped from twelve years and one day without phasing, and the parties may agree to set it aside, since the opinion holds that it is not a matter of public policy. The report therefore states on which ground of uncapping and on which clauses the schedule rests; other articles deal with those grounds (the four ways out of the cap, a rent fixed by settlement during the lease).
What the valuer takes from it
- Where smoothing applies, the rent rises each year by 10% of the previous year’s rent, with no adjustment, up to rental value.
- The rent judge sets the rental value; the schedule is for the parties (2018 opinion), since the phasing is not within that judge’s office (decision of 25 January 2023).
- The report does not reduce rental value to reflect smoothing; it may present the schedule as an annex, excluding indexation.
- Before any schedule, the report states the ground for uncapping and the lease clauses on which the schedule rests.
- The temporary gap between rent paid and rental value is quantified in the income valuation of the premises as in that of the leasehold right.
Further reading
The Commercial rent and leases page describes the assignment, its timescale and its fee. The guide Lease renewal in France: my landlord wants to uncap the rent and the glossary entries lissage, déplafonnement and valeur locative de renouvellement complement this article. Two neighbouring points have their own articles: Turnover rent: the judge sets the minimum if the lease says so and Rent uncapping: a rent fixed by settlement is enough on its own. On the same theme: French commercial lease beyond twelve years: no rent smoothing and Commercial rent uncapping in France: four ways out of the cap. The opinion is available on Légifrance.
What next
An uncapped rent whose increase has to be phased in?
I establish the renewal rental value of the premises, then set out in an annex the schedule of 10% annual increases up to that value, so that the landlord and the tenant can agree the rents payable on a quantified basis.
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