Coliving, the on-trend alternative to hospitality in France: Miracle or mirage?

A recent arrival from across the pond, coliving blends shared accommodation and apart-hotel services, combining communal living with amenities that can be worthy of even the best hotel. The concept is catching on and seducing French investors. But as the saying goes, “all that glitters is not gold”.

What is coliving, and what advantages does it offer?

In coliving, the user, known as a coliver, benefits from furnished accommodation and various apart-hotel amenities, or in some cases from a genuine upscale service tailor-made for digital nomads. This alternative to traditional lodging, whose design and layout are breaking away from conventional ideas, is currently trending in France – flourishing even.

For investors, coliving can also be advantageous. Any, or almost any, space can be converted into a coliving facility since the concept can be adapted to anything from a 5-bedroom property to a 100-unit apartment block. To the casual eye, it’s a win-win situation – the return on investment appears attractive, the business plan is optimistic, …

The downside of coliving

And this is all true. However, new to France, coliving is not covered by any specific legislation or legal regime, as is the case elsewhere in Europe. Since the average tenure is 10 months, only contracts relating to furnished accommodation or tourism accommodation can be utilised in coliving at the moment. This has an impact on the profitability of the investment, which could be severely curbed by the need to integrate social housing in certain French cities.

In addition, from the 25th August 2022 onwards, any landlord owning a property rated F or G further to an energy performance diagnosis (DPE)1 will no longer be able to adjust rent annually, meaning a significant loss of income. Landlords concerned will have to rapidly undertake works to improve their energy score.

Moreover, any potential change of use of the premises can be complex, risky and costly. Indeed, this is strictly regulated by the law and local ordinances which may set fairly restrictive conditions for obtaining a change of use. In some cases, some type of compensation may be imposed with regard to social mix objectives, although this is not an insurmountable challenge for the well-advised investor. Attention should also be paid to possible tax inspections linked to VAT recovery, and to ensuring that the activity complies with co-ownership regulations, if applicable.

In spite of this rather complex legislation, French hotel professionals believe that coliving is here to stay. There is no secret – to successfully deliver and operate a profitable coliving project today, it is strongly recommended to engage the services of specialist lawyers and consultants. Don’t start the ball rolling without them – 😊

1 DPE : Diagnostic de Performance Energétique

Christopher Boinet
FR – IE Paris – Avocats
In Extenso Avocats

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