The COVID-19 pandemic, the rebound in tourism and the increase in construction costs have given rise to new models in the hotel industry in France and elsewhere in Europe, revolutionizing market standards and existing offers. For several years, the hotel industry has faced strong competition from the Airbnb marketplace, with accommodation offered by apartment owners in major cities. Hospitality professionals even align their prices with those offered on Airbnb, which has become a de facto benchmark on the market.
Also, due to the scarcity of real estate in French city centers, particularly in Paris, investors have created a hybrid offer combining the advantages of comfort and location of an apartment with the conveniences of a hotel, such as room service, laundry service and cuisine prepared by a chef. meal.
Although the concept is appealing to consumers and seems simple to implement, it presents legal challenges for investors. Indeed, the apartments offered are mostly located in residential buildings and therefore defined as residential by the planning laws as well as by the contractual rules of co-ownership.
Hotel activity is a commercial activity that cannot take place in a building marked as residential. Also, if the co-ownership terms provide for the apartment to be used for residential purposes, this commercial activity will violate the contracts.
Unless the investor acquires the entire building and declares it to be for general business purposes, the investor must understand the construction and contractual uses of the property – before business operations begin.
If the property is defined as residential with regard to local planning laws, the investor must carry out a change of use through administrative procedures. The procedure is simple, but the investor must take into account the time it takes, because the changes of use must be fully approved before the start of the activity, under penalty of criminal and/or penal sanctions.
In addition, if the property acquired is for residential use under the co-ownership, the investor must obtain the agreement of the co-owners to modify the contractual destination of the property in order to comply with these provisions. Investors should engage in planning and dialogue with residents during this phase. Otherwise, and without the agreement of the co-owners, the activity cannot continue and the co-owners could take legal action.
Given these complexities, we recommend that investors prepare their projects in advance and seek legal advice in order to obtain all the necessary authorizations to avoid sanctions and penalties.
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