Modern Architecture

UpperKey Blog

The Guarantee for Unpaid Rent in France - What You Need to Know

In France, it is compulsory for landlords to take out insurance to cover unpaid rent by their tenants. This insurance, called the guarantee of unpaid rents (GLI), is intended to protect landlords in the event that the tenant(s) fail to pay the rent. In this article, we will explain in detail how the GLI works in France.

The guarantee can help avoid issues with unpaid rent.

What is the guarantee for unpaid rent (GLI)?

GLI is an acronym used for Garantie des loyers impayés. It is an insurance policy that landlords take out to protect themselves against unpaid rent and late payments by tenants; it can also cover damage caused by negligence or force majeure events such as fire or flooding...

A guarantee for unpaid rent is a guarantee that the rent will be paid. It is a guarantee that you can give to your landlord to make sure that you pay the rent. This is not to be confused with the security deposit that tenants pay when they move in. If you do not pay the rent, the guarantee can be used to cover the rent. Guarantees for unpaid rent are usually provided by financial institutions, insurance companies or government agencies. They can be a clause in the lease or a separate agreement. Rent guarantees can help landlords to feel more secure in letting their property to tenants and can help tenants to obtain accommodation in an area where they would otherwise not be able to afford it.


In France, rent guarantees are mandatory for all new leases signed after 1 July 2009. There are different types of guarantee for unpaid rent, but they all aim to protect the landlord in the event of non-payment of rent by the tenant. The most common guarantee is a bank guarantee, but there are also private insurance and public guarantees. The guarantee for unpaid rent is an important tool to provide security for landlords and to enable tenants to access affordable housing.

How does the guarantee for unpaid rent work?

Under French law, all landlords must take out insurance to cover the risk of unpaid rent from the tenant(s). This insurance takes effect from the date the lease is signed and only covers unpaid rent and charges during the term of the lease. If you have more than one rented property, you can take out a multi-risk home insurance policy that will cover all your rented properties.


There are different ways for a landlord to take out a GLI: either directly with an insurance company, through an estate agent or via a public body such as the Caisse des Dépôts et Consignations (CDC). In all cases, it is important to compare offers before taking out insurance, as rates can vary considerably from one insurer to another.


Some insurance companies also offer optional extensions of cover, such as covering the costs of litigation or compensation for non-payment of the security deposit by the tenant. These extensions can be useful for landlords who need extra protection against the risk of tenants defaulting on rent payments.


How do I choose a tenant insurance policy for rent protection?

As a landlord, it's important to choose the right tenant insurance to protect you in case your tenants don't pay their rent. There are a few things you should consider when choosing an insurance policy, including the amount of coverage you need and the type of protection you are looking for. With so many different options on the market, it can be difficult to try and determine which one is best for you.

All insurances are different, so you need to choose one most fitting to your needs.

1. How much is your property worth?

The first is the amount of cover you need. Make sure you calculate the value of your rental property so you know how much cover you need in case of damage. You should also consider the type of protection you are looking for.


For example, some policies will cover legal costs if your tenant fails to pay rent and you have to go to court. Other policies will only cover the cost of damage to your property.

2. How many tenants should you cover?

You also need to decide whether you want a policy that covers all tenants or just one tenant. If you have several tenants, it might be worth getting a policy that covers all of them in case one of them fails to pay rent. Alternatively, if you have one particularly risky tenant, you may want to get a policy that covers only that tenant.

3. Compare quotes

Once you've decided on the basics, you can start comparing different policies on the market. Make sure you read the fine print to understand exactly what each policy does and does not cover. Once you've found a few policies that fit your needs, compare prices and choose the most affordable option.

What are the differences between rent-free and furnished tenancies?

In the case of an empty tenancy, rental insurance generally provides cover for unpaid rent and for rental risks (water damage, fire, etc.).


As far as the guarantee for unpaid rent is concerned, it can be covered by a second-ranking guarantee or by a deposit. This means that, in the event of the tenant's default, the guarantor or surety will be obliged to pay the unpaid rent to the landlord.

The rental risk guarantee, on the other hand, is generally covered by an insurance policy taken out by the landlord. In the event of a claim, the insurer will pay the repair costs.

The guarantee can be covered with a deposit made by the renter.

In the case of a furnished rental, the guarantees required are the same as for an empty rental, but it is also compulsory to take out furnished rent insurance. This insurance covers the risk of non-payment of rent by the tenant and allows the landlord to continue to receive the rent, even if the tenant defaults. Thus, taking out furnished rent insurance is an additional guarantee for the lessor.

Another solution to guarantee the payment of your rent is to entrust the management of your rental to an estate agency. In this way, its agents will take care of all the procedures in the event of unpaid rent.

Conclusion:

The guarantee for unpaid rent has been compulsory in France since 1989 and allows landlords and estate agents to protect themselves against the risks associated with unpaid rent. If you are a landlord or if you manage several rented properties, it is important to take out a GLI insurance policy to be covered in case your tenants fail to pay the rent.