The Rent of a Renewed Lease Cannot Be

Application pratique:

The Court of Cassation confirms that physical modifications like adding rooms break the rent cap on renewal, even if previously compensated. The landlord should commission a new rental value assessment reflecting the expanded premises and can propose a decontrolled rent. To avoid disputes, document the changes thoroughly and serve a formal renewal offer stating the new rent calculation based on the altered surface area.

Application pratique:

According to this ruling, the rent cap does not apply because the premises were physically altered during the lease, even if extra payment was made earlier. The tenant cannot rely on the capping to limit the increase; instead, they should negotiate based on the new rental value of the entire unit. They may seek an expert valuation to ensure the proposed rent aligns with local market rates for similar expanded shops, and consider challenging it only if the increase is disproportionate to the added space.

Application pratique:

Under this precedent, the pharmacy’s expansion likely means the statutory capping mechanism will not apply upon renewal, allowing the rent to be reset to market value. The investor should gather all documentation (building permits, addendum) evidencing the physical change. Prior to acquisition, they can factor in the potential for a higher, uncapped rent in their financial projections, and engage a property lawyer to confirm applicability and prepare a renewal notice referencing the alteration.