Laws No. 1235, 1291, and 887: Social Impact in the Housing Regulation Sector in Monaco
The housing sector in Monaco is divided into several distinct areas. The free sector, which has no specific regulation. The state-managed domain sector, reserved for Monegasque citizens, and finally, the regulated sector, also known as the old sector, which includes buildings constructed or completed before 1st September 1947 and is subject to Laws No. 1235, 1291, and 887.
These laws play a crucial role in the regulation and promotion of residential stability in the Principality. While distinct, they are interconnected and primarily aim to meet social needs and ensure equitable access to housing.
They enable the coexistence of two apartment rental regimes: the protected sector governed by Law No. 1235 of 28th December 2000 (amended by Law No. 1291 of 21st December 2004) and the liberalised sector governed by Law No. 887 of 25th June 1970. Both sectors are subject to the State’s right of pre-emption in the event of a sale, followed, if the State does not exercise it, by the tenant’s right of pre-emption.
The Rental Regime in the Protected Sector
This is the sector protected by the Monegasque State, where rents are regulated. Indeed, only the housing service is authorised to set the applicable rent amount, which will be determined by comparing rates applied for similar apartments in the same residential area.
This sector is reserved exclusively for persons registered as protected persons, according to the following categories and in the indicated order of priority:
- Monegasque nationals;
- those born to Monegasque parents, spouses, widowers or widows of Monegasques;
- persons divorced from Monegasques with shared children;
- persons born in Monaco residing there since birth;
- those who have resided in Monaco for at least forty uninterrupted years.
The lease must have a duration of 6 years, automatically renewable under the same conditions, with a right of termination by the tenant during the contract or at its expiration by giving three months’ notice. However, the landlord may terminate the lease:
- To occupy the apartment themselves or if their ascendants, descendants, their spouse, their siblings, their descendants, or the ascendants or descendants of the spouse intend to occupy it;
- To demolish and rebuild, raise, modify the structure to create new living areas, or carry out repair and improvement works in the building.
Premises subject to this legislation may be partially dedicated to non-commercial associative or professional activities. However, the exercise of these activities requires the prior approval of the landlord and must comply with the existing co-ownership regulations.
The Rental Regime in the Liberalised Sector
Law No. 887 marks the first step towards the liberalisation of the old housing sector. It targets higher quality accommodations or those always occupied by their owners. To promote this liberalisation, it expands the possibility of renting to individuals other than the residents of the protected sector, notably:
- the ascendants or descendants of the owner or their spouse, as well as their spouse;
- Monegasque citizens;
- persons residing in Monaco for at least five years and engaging in professional activity in the Principality for more than six months;
- persons working in Monaco for at least five years.
In this sector, the landlord is required to offer a six-year lease to the tenant, renewable for six-year periods, with the possibility for the tenant to terminate annually without having to justify reasons. The landlord can only terminate the lease at its expiry and without the obligation to provide a justification, unlike the regime provided by Law No. 1235. The landlord can also choose to put the properties back on the market, occupy them personally, or leave them unoccupied, which also differs from the regime of Law No. 1235.
It is also possible to carry out non-commercial professional activities in these accommodations, provided that it is mixed use, i.e., with the obligation to establish residence there, and refraining from hiring staff. The option of domiciling only an administrative office is rarely authorised, but the domiciliation of a liberal activity without establishing residence is permitted.
Due to the particular nature and strict rules governing the rental market in the protected sector, Segond Immobilier agency offers its expertise and know-how to support you in searching for a property subject to these regulations or to assist you in managing your property if you are the owner.
