Recent developments in commercial leases: what's changing for your business?

By Yasmine EDDAM22 April 2025

The law is never static, and the field of commercial leases, which is essential to economic life, is no exception to this rule. In recent years, a number of major legislative texts, as well as exceptional situations such as the health crisis, have modified or clarified certain important aspects of the status of commercial leases. In particular, the 2014 Pinel Act sought to rebalance relations between lessors and lessees, while the COVID-19 pandemic raised unprecedented questions about the performance of contracts. For entrepreneurs, shopkeepers and craftsmen, as well as for owners of commercial premises, it is important to understand these changes in order to better understand their current rights and obligations. This article explains the main recent changes and their practical consequences.

The Pinel Act (2014): structural changes

Law 2014-626 of 18 June 2014, known as the Pinel Law, introduced a series of significant changes to the status of commercial leases. Here are the most significant for your day-to-day business:

Capping the de-capping and smoothing the rent increase

Previously, when the rent for the renewed lease was "de-capped" (i.e. set at the market rental value, which is often much higher than the previous index-linked rent), the increase could be brutal for the tenant. The Pinel Act introduced a "smoothing" mechanism (article L. 145-34 of the French Commercial Code): if the removal of the ceiling leads to an increase of more than 10% in the rent paid the previous year, this increase is spread over time. Each year, the increase cannot exceed 10% of the previous year's rent, until the new amount is gradually reached.

Practical impact: For tenants, this will cushion the financial impact of removing the ceiling. For landlords, it means that the return to full rental value will be gradual.

New reference indices for indexation

The Pinel Act has made official the replacement of the Construction Cost Index (ICC) as the sole reference index for annual indexation (sliding scale clause) and the calculation of the renewal ceiling. The legal indices are now :

L'Index of commercial rents (ILC) for commercial and craft activities.
L'Index of rents for commercial activities (ILAT) for office, logistics and professional activities. These indices (ILC and ILAT) are deemed to better reflect economic trends in the sectors concerned than the ICC, which is based on construction costs. Articles L. 145-34 and L. 145-38 of the French Commercial Code now incorporate these indices.
Practical impact: Changes in index-linked rents are potentially more closely correlated with the economic performance of the tenant's business sector. Old leases can continue to use the ICC if it was stipulated, but new contracts or renewals use ILC or ILAT.

More controlled allocation of charges, taxes and levies

To improve transparency, the Pinel Act has tightened the rules on charges payable by tenants (article L. 145-40-2 C. com.):

The lease contract must include a precise and restrictive inventory categories of charges, taxes and fees relating to the lease, with their breakdown.
A decree (no. 2014-1317 of 3 November 2014) lists the charges that can no longer be charged to the tenantThese include major repairs (art. 606 C. civ.), the lessor's rent management fees and taxes (such as CET, except for property tax and its additional taxes, which can always be re-billed).
The lessor must provide a annual summary charges to the tenant.
Practical impact: Better visibility for the tenant of the real costs of the lease and limitation of rebillable charges, particularly major repairs and certain management costs.

Tenant's right of pre-emption in the event of sale of the premises

This is a major innovation introduced by article L. 145-46-1 of the French Commercial Code. When the owner of premises used for commercial or craft purposes (excluding offices, single-purpose premises, industrial or logistics premises) plans to sell it, he must first inform the tenant. This notification constitutes an offer to sell in favour of the lessee, who then has a right of pre-emption.

Procedure: The landlord notifies the tenant of the price and conditions of the proposed sale (this offer may not include negotiation fees). The tenant has one month to accept. If he accepts, he then has two months (or four if he takes out a loan) to complete the sale. If the landlord finally decides to sell on terms or at a price more advantageous to the buyer, he must notify the tenant again.
Exceptions: This right does not apply in the case of a single transfer of several premises in a commercial complex, a global transfer of a building including commercial premises, or a transfer to a close relative of the lessor.
Practical impact: This is a real opportunity for lessees to acquire the premises of their business. For the lessor, it is an imperative formality that must be complied with or the sale will be null and void.

Limited duration of the seller's joint and several guarantee

When a tenant transfers his lease (usually with his business), the lessor very often requires him to remain a "joint and several guarantor" for the payment of rent by the new tenant (the transferee), sometimes for the entire remaining term of the lease, or even its renewals. Article L. 145-16-2 of the French Commercial Code now limits the period during which the lessor may invoke this joint and several guarantee to three years from the date of transfer.

Practical impact: Significant reduction in long-term risk for the seller of a business, thus facilitating business transfers.

Regulation of derogatory leases

The maximum duration of derogatory leases (which fall outside the scope of the statute) has been increased from two to three years. three years in total (article L. 145-5 C. com.). Above all, it is no longer possible to chain these short leases indefinitely for the same business on the same premises. If the tenant is left in possession at the end of the three-year period, a nine-year commercial lease subject to is applied automatically.

Practical impact: Limits prolonged insecurity for tenants and clarifies the transition to protective status.

Obligatory inventory of fixtures

A joint inventory of fixtures (or one drawn up by a bailiff if there is disagreement, at shared expense) is now compulsory when the tenant moves into the premises. and when they are returned (article L. 145-40-1 C. com.).

Practical impact: Aims to reduce the frequent disputes at the end of leases concerning the condition of the premises and the allocation of any damage.

The impact of the health crisis (COVID-19): from temporary measures to lasting lessons

The COVID-19 pandemic and the confinement or administrative closure measures have disrupted the performance of many contracts, including commercial leases.

Temporary suspension of penalties for non-payment

In response to the economic difficulties caused by administrative closures, ordinances passed in 2020 (in particular ordinance no. 2020-316) temporarily neutralised penalties for eligible businesses that were unable to pay their rent and service charges during so-called "protected" periods. This prohibited late payment penalties, interest, the application of resolutory clauses, the activation of guarantees and evictions.

Practical impact: These measures provided temporary relief but did not cancel the rent debt. They are no longer in force today (April 2025).

The failure of the "force majeure" and "non-performance exception" arguments

Many tenants tried to argue that the administrative closure constituted a case of force majeure or justified an exception for non-performance (suspension of rent payments because the landlord could no longer ensure peaceful enjoyment) to avoid paying rent during the confinements. However, in a series of rulings handed down in 2022 and 2023, the Court of Cassation rejected most of these arguments. It held that :

Force majeure was generally not established because the debtor's inability to pay was not absolute (difficulty is not impossibility) and the obligation to pay a sum of money is not made impossible by an external event.
The lessor's obligation to deliver (to make the premises available) had been fulfilled, even if operation was prevented by an administrative decision external to the lessor. The lessor is not the guarantor of "marketability" or the ability to operate imposed by the State.
The operating risk (including the risk associated with an administrative decision) is borne by the tenant.
Practical impact: Case law confirmed that, save in very exceptional cases, commercial rents remained payable during periods of administrative closure imposed by the health crisis. The obligation to pay was not automatically suspended.

Good faith and renegotiation

Despite the continuing obligation to pay, the courts have often emphasised the importance of the contractual good faith (article 1104 of the French Civil Code). In these exceptional circumstances, they encouraged the parties to discuss and seek amicable solutions (postponements, partial remissions, etc.). The absence of dialogue or the systematic refusal to negotiate could sometimes be sanctioned.

Practical impact: The crisis has served as a reminder that, although strict law maintains obligations, good faith negotiation remains an essential tool for managing unforeseen events in a long-term contractual relationship such as a commercial lease.

The legal landscape of commercial leases has therefore undergone some significant adjustments. The Pinel Act has brought clarification and a degree of rebalancing, while post-COVID case law has clarified the extent of each party's obligations in exceptional circumstances.

These developments in legislation and case law are changing the way your commercial lease is managed. Whether you are a lessee or a lessor, it is important to check that your contract complies with the law and to keep up to date with your rights and obligations. For assistance in interpreting your lease or to support you in your negotiations, our law firm specialising in commercial leases is at your service.

Sources

Commercial Code, articles L. 145-4, L. 145-5, L. 145-9, L. 145-14, L. 145-16-2, L. 145-34, L. 145-38, L. 145-40-1, L. 145-40-2, L. 145-41, L. 145-46-1.
Law no. 2014-626 of 18 June 2014 on craft trades, commerce and very small businesses (known as the Pinel Law).
Decree no. 2014-1317 of 3 November 2014 on commercial leases.
Order no. 2020-316 of 25 March 2020 relating to the payment of rent, water, gas and electricity bills for the business premises of companies whose activity is affected by the spread of the covid-19 epidemic.
Recent case law from the Cour de cassation (particularly concerning the interpretation of COVID measures).
Civil Code (general principles of obligations and contracts).