Buy-to-let investment
Tourist furnished accommodation in Lyon: what the bank looks at, what the City imposes
Short-term letting in Lyon: registration, change of use, compensation in the hyper-centre, and the rent a lender may retain.
To finance a property intended for short-term letting in Lyon, a bank first verifies that this use is authorised. Outside of a principal residence, a change of use authorisation is required, subject to compensation in the hyper-centre and for companies. Without compensation, it is temporary and personal: the income presented must therefore also hold up under annual letting.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- In Lyon, letting a property as tourist furnished accommodation that is not your principal residence requires a change of use authorisation.
- The registration number is mandatory on property listings, but it does not constitute an authorisation: these are two distinct procedures.
- In the hyper-centre, every application is subject to compensation; elsewhere, only an individual is exempt, for a small property and only one.
- The authorisation without compensation is temporary, personal and non-renewable: it may expire before the end of the loan.
- A lender excludes income that is not stable and recurring: the file must hold up on a fallback rent under annual letting.
- With compensation, the use becomes durable, but you must finance a second premises and the property changes its destination.
To finance a furnished holiday let in Lyon, the lender first wants to know whether nightly letting is authorised at that address, for you, and for how long. The yield comes afterwards, as with any rental investment.
What does a bank check before financing a property let on a nightly basis?
The authorised use, the documented income, and its duration relative to that of the loan. Anything that is not a stable and recurring resource is excluded.
A property that has not yet been purchased has no history of nightly lets. Some banks retain nothing before the property is operated; the rents retained are discounted. What is retained enters the debt-to-income ratio (35,00 % ()) : rental income and indebtedness.
In Lyon, when is an authorisation required to let as a furnished holiday let?
As soon as the accommodation is not your main residence: this is a change of use, subject to the mayor's authorisation. The registration number is not an authorisation.
| Situation | Procedure | What the City of Lyon says |
|---|---|---|
| Your main residence, let for a few weeks a year | Online declaration; the registration number is issued immediately | Letting is permitted within the limit of a number of days per year, without any other formality |
| A property that is not your main residence | Application for a change of use, then declaration and number | You must be the owner of the property; the number alone is not an authorisation |
| A property held by a company | Application for a change of use with compensation | Compensation applies from the first square metre, wherever the property is located in Lyon |
Your main residence let for a few weeks retains a main residence loan. In a co-ownership, inform the building manager.
What does the Lyon regulation provide for, depending on the address and the surface area?
In the hyper-centre, compensation is required in all cases. Elsewhere, a private individual may obtain, for a single small dwelling, an authorisation without compensation: temporary, personal, and non-renewable.
| Where, and which dwelling | Private individual | Company |
|---|---|---|
| Hyper-centre, regardless of surface area | Compensation from the first square metre, by a premises located in the hyper-centre and in the same arrondissement | Same rule |
| Outside the hyper-centre, below the surface area threshold of the regulation | Authorisation without compensation, for a single dwelling per owner in all of Lyon, on a personal basis, for a limited duration and non-renewable; compensation for any additional dwelling | Compensation |
| Outside the hyper-centre, from this threshold onwards | Compensation from the first square metre | Compensation |
Threshold, duration and plan of the hyper-centre: the City’s page on change of use. The surface area taken into account is the usable floor area; for a divided lot, that of the original lot.
Compensation, in practice
You convert an office or a shop in the same arrondissement, of at least equivalent surface area, into a dwelling. Or you purchase commerciality rights. The property then becomes hotel accommodation, on a permanent basis.
What leads to the refusal of an application
- A co-ownership by-law that prohibits the activity.
- An uninhabitable dwelling, unsanitary or subject to an order.
- An energy diagnostic outside classes A to E.
- A dwelling under a regulated rent or in a real solidary lease.
- A building where the residential use would fall below half of the surface areas.
Letting without authorisation exposes you to a civil fine.
What rent can the bank take into account when the use depends on an authorisation?
The rent that the property can lawfully and sustainably generate. A temporary authorisation expires before the loan is granted: your application must stand on an annual rent.
- Temporary authorisation: the number of nights has a known end date.
- With compensation: the use continues, but the premises to be converted change the scale of the financing.
- Without authorisation: there is no short-term income to present.
A capped fallback rent
On an annual basis, the rent remains subject to the Lyon rent control: rent control in Lyon and Villeurbanne. It is this discounted rent that underpins the plan. See also the LMNP scheme and rental investment in Lyon.
Is this financing still a residential mortgage?
Yes, for an individual purchasing a dwelling. With an operating company or a premises that has become a hotel, it may become a business loan, which falls outside my mandate.
Beyond this: operations outside the scope.
Six checks before discussing financing
- The address, on the hyper-centre map.
- The living area, and the history of the lot.
- The buyer: an individual or a company.
- The co-ownership regulations.
- The energy performance diagnosis.
- Two projections: nights up to the expiry of the authorisation, and a capped annual rent.
Sandy Mascart, a mortgage intermediary registered with ORIAS (No. 26000541), prepares the file and presents it to lenders, who make the decision.
Does your project stand without the nights? Create your file or have it checked by telephone.
Sources
- Ville de Lyon — Déclarer un meublé de tourisme
- Ville de Lyon — Demander le changement d'usage d'un logement
- lyon.fr — Règlement fixant les conditions de délivrance des autorisations de changement d'usage de locaux d'habitation sur le territoire de la Ville de Lyon
- lyon.fr — Délibération nº CP-2023-2550 de la commission permanente du 10 juillet 2023
- Service-Public.fr — Faire de sa résidence secondaire une location de vacances (meublé de tourisme)
- Légifrance — Article L. 631-7 du code de la construction et de l’habitation
- Légifrance — Article L. 631-7-1 A du code de la construction et de l’habitation
- Légifrance — /codes/article_lc/LEGIARTI000050623378
- Légifrance — /jorf/article_jo/JORFARTI000044178686
Read next
- How much can I borrow? Mortgage capacity in Lyon
- Investing in LMNP: financing a furnished property, and what the bank actually considers LMNP financing: the same loan as unfurnished letting, but furniture is excluded from the loan, rents must be proven, and the tax return is scrutinised.
- Rental income: how the bank calculates your debt-to-income ratio as an investor Weighting of rents, classical or differential method, disposable income: why two banks calculate an investor's capacity differently.
- Rent control in Lyon and Villeurbanne: the rent the lender will take into account Rent control in Lyon and Villeurbanne: where it applies, how to read the capped reference rent, and the rent the lender will take into account.
- Financing a rental investment in Lyon: what the bank actually looks at Financing a rental investment in Lyon: the rent the bank takes into account, the expected down payment, the mode of operation and the structure that holds up.
All articles on this topic: Buy-to-let investment
Passer au calcul : Borrowing capacity