Smoothing (Plafonnement du Déplafonnement): Key Points
Applies from 1 September 2014 to leases concluded or renewed on or after that date. Where uncapping at renewal produces a market rental value above the current rent, the increase is limited to 10% per year of the rent paid in the preceding year, compounding, until market value is reached (Art. L. 145-34, final para. C. com.).
The court fixes the market value; the parties set the smoothing schedule — not the court. The commercial rent judge has no jurisdiction over the payment schedule. Disputes about the schedule go to the tribunal judiciaire or the enforcement judge (Cass. avis 9 March 2018, n° 15004).
The smoothing does not apply to: bare land, single-use premises, offices, and leases with effective duration over twelve years; or leases where the rent clause independently fixes renewal at market value without invoking the capping rules.
At the next renewal, the cap is calculated from the fixed market value (not the last smoothed payment). Smoothing affects the collection of the rent, not its fixation. The same 10% annual smoothing also applies to uncapping at triennial revision (Art. L. 145-38) and indexed revision (Art. L. 145-39).
The smoothing is not mandatory: parties can agree to disapply it. Indexation and smoothing operate simultaneously where the renewed lease contains an indexation clause — the interaction must be addressed explicitly in the lease or at renewal.

The Smoothing Principle

The final paragraph of Article L. 145-34 of the Code de commerce, introduced by the Pinel reform (Law n° 2014-626 of 18 June 2014), provides that where a notable modification of a rental value criterion or a contractual term above nine years justifies uncapping at renewal, the resulting rent increase cannot exceed 10% of the rent paid in the preceding year for any single year. The market rental value is fixed by the court (or by agreement) at the date of renewal, but the landlord collects it incrementally at 10% annual steps until the full market value is reached.

The smoothing mechanism applies to leases concluded or renewed from 1 September 2014 onwards. It does not apply to leases excluded from capping in the first place (bare land, single-use premises, offices, and leases with effective duration exceeding twelve years). It does not apply where uncapping results from a contractual clause fixing the renewed rent at market value independently of the capping rules (CA Paris, 20 April 2022). It is not mandatory: the parties can agree to disapply it. It also applies to uncapping at triennial revision under Art. L. 145-38, and to indexed rent revision under Art. L. 145-39.

How the Smoothing Works

The Court of Cassation clarified the mechanism in its advisory opinion of 9 March 2018 (n° 15004) and confirmed it in a judgment of 25 January 2023 (n° 21-21.943): the smoothing operates each year by applying a fixed, non-modifiable 10% increment on the rent actually paid in the immediately preceding year. The increments are compounding (each year’s base is the year before, not the original rent), and they continue until the market value is reached. The last step is truncated once market value is reached. The court fixes the market value; it is for the parties, not the court, to establish the payment schedule.

Worked Example — Compounding 10% Annual Smoothing

Lease renewal effective 1 June 2023. Last rent paid in preceding twelve months: €50,000. Market value fixed at €80,000.

  • Year 1 (June 2023): €50,000 × 1.10 = €55,000
  • Year 2 (June 2024): €55,000 × 1.10 = €60,500
  • Year 3 (June 2025): €60,500 × 1.10 = €66,550
  • Year 4 (June 2026): €66,550 × 1.10 = €73,205
  • Year 5 (June 2027): €73,205 × 1.10 = €80,526 → market value reached; stop at €80,000
Market value of €80,000 fully reached in Year 5. The final step is truncated.

The “Rent Paid”: What It Means and the Open Question

The text refers to “the rent paid in the preceding year.” Whether this means the calendar year or the twelve months preceding the renewal date is debated: the latter interpretation, modelled on the general procedural rules for time periods, is generally preferred as it better reflects the actual amount paid at the time of renewal. The question of whether a tenant who deliberately under-pays in the last months of the lease to depress the first smoothing step is acting in bad faith — and should be treated as paying the contractually due amount — is unresolved; the spirit of the text points to the contractually due rent, but the literal wording says “paid.”

Court Fixes the Value; Parties Set the Schedule

A key point from the 2018 advisory opinion: the smoothing mechanism is distinct from the fixation of the market rental value. The commercial rent judge (juge des loyers commerciaux) is competent only to fix the value; they have no jurisdiction to establish the smoothing schedule or to order payment. Setting the annual payment schedule is for the parties to agree. If they cannot agree, the dispute is heard by the tribunal judiciaire (not the commercial rent court) or, where the issue arises at the enforcement stage, by the enforcement judge.

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Practical Point — Document the Schedule in Writing

Because the court cannot establish the smoothing schedule, the parties must address it themselves — ideally in the new lease document or in a written agreement immediately following the rent-fixing judgment. The schedule should specify: the market value as fixed by the court; the starting rent; each annual step amount; the year in which market value is expected to be reached; and what happens if the market value is not reached in the scheduled number of steps (e.g. due to rounding). An undocumented smoothing schedule is an invitation to enforcement disputes.

Interaction with Indexation Clauses

Where the renewed lease contains an indexation clause, the 10% annual smoothing and the indexation operate simultaneously — neither cancels the other. Three possible methods have been discussed: applying indexation first then the smoothing increment; applying the smoothing increment first then indexation; or calculating indexation on the fixed market value and adding the resulting increase on top of the smoothed amount. Until courts resolve the question definitively, the parties are advised to address this interaction explicitly in the lease or at renewal.

Impact on the Following Renewal

Where the smoothing has not yet reached market value at the time the next renewal falls due, the rent available for the cap calculation at that next renewal is the market value fixed at the prior renewal — not the last smoothed amount paid. The Court of Cassation confirmed in the 2018 advisory opinion that the smoothing mechanism affects the collection of the rent, not its fixation. The new rent at the following renewal is therefore calculated from the market value fixed by the court, and the index variation is applied to that value. Using the last smoothed payment as the base would compound the distortion indefinitely.

Smoothing at Triennial Revision and Indexed Revision

The same 10% annual smoothing applies where uncapping occurs in the context of a triennial revision (Art. L. 145-38) because a material modification of local commercial factors has produced a rental value more than 10% above the current rent. It also applies to indexed rent revision under Art. L. 145-39 where the index has caused the rent to move more than 25% from the contractual benchmark. In both cases the court fixes the value; the parties set the schedule. If a triennial revision falls during an ongoing smoothing period from a prior renewal, there is an open question as to whether the triennial revision terminates the smoothing by establishing a new rent that takes effect immediately from the date of the demand — an approach supported by the mandatory nature of Art. L. 145-38 and the statutory text’s silence on suspending a revision where smoothing is ongoing.

Practical Checklist: Establishing the Smoothing Schedule After an Uncapped Renewal
Step 1 — Obtain the market value from the court judgment: the smoothing schedule cannot be established until the market value is fixed. Obtain a certified copy of the rent-fixing judgment (or the agreement on rent) and confirm the market value figure is final — i.e. the appeal period has expired or no appeal has been lodged.
Step 2 — Identify the base rent: confirm the “rent paid in the preceding year” — the twelve months before the renewal date (preferred interpretation). Document the actual amounts paid. If there is any doubt about whether the tenant deliberately under-paid, preserve evidence of the contractually due amounts for any bad-faith argument.
Step 3 — Calculate each compounding step to market value: apply 10% to each preceding year’s amount (not to the original rent) until market value is reached. Calculate the exact number of full steps and the truncated final step. Include the full multi-year schedule in the written agreement.
Step 4 — Address indexation interaction: if the renewed lease contains an indexation clause, agree explicitly in writing on which method applies: (a) smoothing increment first, then indexation; (b) indexation first, then smoothing increment; or (c) indexation on the fixed market value added to the smoothed base. Include this in the written schedule or the new lease document.
Step 5 — Note the base for the next renewal: the base for the next renewal’s cap calculation is the court-fixed market value, not the last smoothed payment. Record this explicitly in the schedule document to avoid disputes when the next renewal falls due, particularly where the smoothing has not yet fully run its course.
Navigating an Uncapped Renewal with the Smoothing Mechanism?

The smoothing schedule is for the parties to establish, not the court. Whether you are a landlord calculating the multi-year payment trajectory or a tenant reviewing what will be owed each year and how indexation interacts with the smoothing, we advise on the calculation and the contractual documentation needed.

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Legal Notice. This article is for general information and educational purposes only. It does not constitute legal advice. Laws and regulations may have changed since publication. Always seek qualified French legal advice on the Pinel smoothing mechanism in a French commercial lease.