Overview: When the Cap Does Not Apply
Rent capping at renewal is the default rule, but it is displaced in several situations. This article covers two of them: exclusion based on duration (contractual term over nine years, or effective duration exceeding twelve years by tacit extension), and exclusion where the market rental value falls below the capped rent. The other exclusions — notable modification of a rental value criterion, party agreement, and special premises categories — are covered separately.
One important distinction: where the cap is displaced by a contractual term over nine years, the resulting increase is subject to the Pinel smoothing cap (10% per year maximum). Where the cap is displaced by an effective duration exceeding twelve years (tacit extension), no smoothing applies — the full market value applies directly.
Exception 1: Contractual Term Above Nine Years
Article L. 145-34 expressly limits the capping rule to leases "whose duration does not exceed nine years." Any lease with a contractual term above nine years is excluded from capping from the outset. The new rent at renewal is fixed at market rental value. Because this exception is triggered by a lease clause (not by the passage of time), the 10% annual smoothing rule introduced by the 2014 Pinel reform applies to limit how much the uncapped increase can operate in any single year.
A lease expressed as "nine years from 1 February 2021" expires on 31 January 2030. A lease stated to expire on "1 February 2030" would be nine years and one day — above nine years, triggering the exclusion from capping. Lease drafters must state the expiry date with precision to avoid inadvertently crossing the nine-year threshold.
Exception 2: Effective Duration Exceeding Twelve Years
Where a nine-year lease is tacitly extended beyond expiry and the total effective duration (from start to renewal) exceeds twelve years, the capping rule ceases to apply by operation of Article L. 145-34. Unlike the contractual duration exception, no smoothing applies here — the rent goes directly to full market value.
This achieves uncapping without needing any specific event — just the passage of time. Once twelve years have elapsed, the landlord serves a notice and the new rent is fixed at full market value without any cap or smoothing.
The tenant must therefore act with enough lead time that the effective date of the request falls before the lease reaches twelve years of effective duration. A tenant's renewal request with an earlier effective date prevails over a simultaneously served landlord's notice (Cass. 3e civ., 18 Dec. 1991).
Tenant's deadline: to prevent the effective duration exceeding twelve years, the tenant's renewal request must take effect no later than 31 January 2025. Because the effective date is the first day of the quarter following service, the request must be served no later than 31 December 2024 to take effect on 1 January 2025.
The trap: if served between 1 January 2025 and 31 January 2025, the effective date would be 1 April 2025 — after the twelve-year mark. The cap is lost.
Where a nine-year lease has been running in tacit extension, the tenant must serve their renewal request by 31 December of the year in which the lease reaches eleven years from its start date (i.e. at least one full quarter before the twelve-year anniversary) to ensure the effective date falls before that anniversary. Missing this deadline means the effective duration will exceed twelve years and the cap is permanently lost for this renewal.
Exception 3: Market Value Below the Capped Rent
The capping rule only prevents the new rent from exceeding the cap — it does not prevent it from falling below the cap. Where the market rental value is lower than the capped rent, the court must fix the new rent at market value, even without any uncapping ground being established, and even ex officio if neither party has raised it (Cass. 3e civ., 5 November 2014; Cass. 3e civ., 29 November 2018). The court must always determine the market rental value, even in a capping scenario.
Market value can in principle go below the current lease rent. A renewal fixed at market value that is lower than the expired lease rent is lawful and does not violate the landlord's property rights (Cass. 3e civ., 12 November 2020). This is not "uncapping" in the strict sense — that term is reserved for cases where market value exceeds the cap. The below-cap situation simply applies the lower of the two figures. Tenants facing a capping dispute should always commission an independent rental value assessment: if market conditions have moved unfavourably, a judicial fixation at market value may produce a better outcome than the cap formula.
- Contractual term >9 years (Art. L. 145-34): cap excluded from the outset; new rent at market value; but 10% annual Pinel smoothing applies. Drafting precision matters: "9 years from 1 Feb 2021" = expires 31 Jan 2030; "expires 1 Feb 2030" = 9 years and 1 day, triggering the exclusion.
- Effective duration >12 years through tacit extension (Art. L. 145-34): cap excluded; no Pinel smoothing; full market value from day one. Landlord tactic: let the lease run to 12 years, then serve notice. Tenant tactic: serve renewal request before the 12-year mark — it is the effective date (first day of following quarter) that counts, not the date of service.
- Twelve-year deadline for tenants: serve by 31 December of year 11 so the effective date (1 January of year 12) falls before the 12-year anniversary. If served between 1 January and 31 January of year 12, the effective date is 1 April — too late. The cap is permanently lost for this renewal.
- Tenant's renewal request prevails over a simultaneously served landlord's notice where the request has an earlier effective date (Cass. 3e civ., 18 Dec. 1991). This is the tactical basis for the tenant's incentive to serve early.
- Below-cap market value (Cass. 3e civ., 5 Nov. 2014; 29 Nov. 2018): if market value is lower than the capped rent, court must apply the lower figure — even ex officio. Rent can fall below the current lease rent at renewal (Cass. 3e civ., 12 Nov. 2020). Always commission an independent rental value assessment; below-market conditions may produce a better outcome than the cap formula.
Whether you are a landlord assessing whether the effective duration has crossed twelve years, a tenant calculating when to serve to protect the cap, or either party evaluating whether current market value is above or below the cap, we advise on the timing, the calculation, and the renewal strategy.
Book a ConsultationThis article is for general information and educational purposes only. It does not constitute legal advice and does not create a lawyer-client relationship. Laws and regulations may have changed since publication. Always seek qualified French legal advice on rent capping exceptions in a French commercial lease.
Key Legal References
Rent capping provision: excludes leases with contractual term above 9 years and effective duration above 12 years through tacit extension
Below-cap market value: court must apply market value if lower than the capped rent, even ex officio
Renewal fixed at market value lower than the expired lease rent is lawful and does not violate landlord’s property rights
Tenant’s renewal request with earlier effective date prevails over a simultaneously served landlord’s notice
