Glossary
The vocabulary of buy-to-let investment,
simply defined.
LMNP, DPE, property deficit, net-net yield, mobility lease: 46 short, precise definitions linked to the pages that develop them.
Updated on by the Covesta team
Taxation
Statuses, regimes and taxes that apply to rents and to resale.
LMNP
Loueur en meublé non professionnel: non-professional furnished landlord
- Tax status of a private individual who lets a furnished dwelling without making it their main activity. The rents are taxed in the category of industrial and commercial profits (BIC), not property income (revenus fonciers). The status remains non-professional as long as annual furnished-letting receipts do not exceed €23,000 or remain lower than the tax household's other earned income. Two tax regimes are possible: micro-BIC or the actual regime (régime réel).Our taxation pageLMNP: actual regime or micro-BIC
LMP
Loueur en meublé professionnel: professional furnished landlord
- Status that applies when annual furnished-letting receipts exceed €23,000 and are higher than the tax household's other earned income. The professional landlord is liable for self-employed social security contributions, may set losses against total income and benefits from a professional capital gains regime. LMP status is established by the facts; it is not chosen.
Micro-BIC
Simplified tax regime for furnished lettings
- Simplified regime for taxing furnished rents. The tax authorities apply a flat-rate allowance of 50% to long-term furnished-letting receipts, with no possibility of deducting actual expenses. It is available as long as annual receipts stay below a threshold revised every three years, set at €77,700 for 2025 income. It is rarely the most advantageous for a property financed by a loan or renovated.LMNP: actual regime or micro-BIC
Régime réel (BIC)
Actual regime for furnished lettings
- Tax regime for furnished rents under which the landlord deducts actual expenses (loan interest, insurance, property tax, management, maintenance, acquisition costs) and depreciates the property and the furniture. It requires accounts and a tax return package, generally entrusted to an accountant. On a renovated property financed by a loan, it often results in nil or low taxable income for many years.Our taxation page
Amortissement
Depreciation
- Accounting spread of the cost of the property (excluding land), the works and the furniture over their useful life, deducted each year from the result under the actual regime. Depreciation reduces tax without any cash outflow and cannot create a deficit: the unused portion is carried forward with no time limit. For disposals made since 15 February 2025, the depreciation deducted is added back when calculating the taxable capital gain, except for serviced residences.Unfurnished, furnished and Civil Code leases, and their taxation
Déficit foncier
Property income deficit
- Situation of an unfurnished let property whose deductible expenses exceed the rents. The part of the deficit arising from expenses other than loan interest is set against total income up to a limit of €10,700 per year, a ceiling raised to €21,400 for energy renovation works that move a dwelling rated E, F or G to a rating of A to D, for expenditure paid up to 31 December 2027. The surplus is carried forward against property income for the following ten years.Our taxation page
Micro-foncier
Simplified tax regime for unfurnished lettings
- Simplified regime for unfurnished rental income, applicable when the household's gross annual rents do not exceed €15,000. A flat-rate allowance of 30% replaces the deduction of actual expenses. Above the threshold, or by election, the actual property income regime applies.
Prélèvements sociaux
Social levies
- Contributions (CSG, CRDS, solidarity levy) due on investment income in addition to income tax. Their overall rate is 17.2% on property income and property capital gains. Since the Social Security Financing Act for 2026, furnished-letting profits bear a rate of 18.6%.Unfurnished, furnished and Civil Code leases, and their taxation
Plus-value immobilière
Property capital gain
- Difference between the sale price and the purchase price increased by costs and certain works, taxed at 19% income tax plus social levies. Allowances for length of ownership lead to full exemption from income tax after 22 years and from social levies after 30 years. The main residence is exempt.
SCI à l'IS
Société civile immobilière soumise à l'impôt sur les sociétés: property company subject to corporation tax
- Company holding one or more properties, whose results are taxed at corporation tax rather than in the hands of the partners. It allows the building to be depreciated and rents to be accumulated at a reduced rate, at the price of heavier taxation on resale and on distribution. This structure is compared with ownership in one's own name and with LMNP according to the investor's horizon and objectives.Our taxation page
Letting and leases
Tenancy agreements, their terms, their guarantees and their management.
Bail nu
Unfurnished lease, French law of 6 July 1989
- Tenancy agreement for an unfurnished dwelling used as a main residence. Its minimum term is three years when the landlord is a private individual, six years when it is a legal entity, with tacit renewal. The deposit is capped at one month's rent excluding charges and the tenant's notice period is three months, reduced to one month in a high-demand area (zone tendue). The rents fall under property income (revenus fonciers).Unfurnished, furnished and Civil Code leases, and their taxation
Bail meublé
Furnished lease
- Tenancy agreement for a dwelling equipped with the furniture set by decree, used as a main residence. Its term is one year, renewable, or nine months, non-renewable, when the tenant is a student. The deposit is capped at two months' rent excluding charges and the tenant's notice period is one month. The rents fall under industrial and commercial profits, which opens up LMNP status.Landlord's guide
Bail mobilité
Mobility lease
- Short-term furnished tenancy agreement of between one and ten months, non-renewable, reserved for people on the move: studies, training, internship, temporary assignment, job transfer. No deposit may be required, but the Visale guarantee is available. It cannot be entered into for the tenant's long-term main residence.
Bail Code civil
Civil Code lease
- Tenancy agreement that falls outside the law of 6 July 1989 because the dwelling is not the tenant's main residence: second home, staff accommodation, letting to a company to house an employee. The parties freely set the term, the rent and the termination conditions. It is frequently used for lettings to companies.Unfurnished, furnished and Civil Code leases, and their taxation
Colocation
House share
- Letting of the same dwelling to several tenants, formalised either by a single lease with a joint and several liability clause, or by an individual lease for each bedroom. Furnished house sharing allows a higher overall rent than a conventional letting for the same floor area, at the price of more active management. It meets demand from students and young professionals in the major university cities.The new academic year and house sharing
Encadrement des loyers
Rent control
- Experimental scheme under the ELAN law that caps the rent of new leases in certain volunteer municipalities, including Paris, Lille, Lyon, Villeurbanne, Montpellier and Bordeaux. An increased reference rent, set by prefectoral order according to the district, the number of rooms and the period of construction, may only be exceeded by a justified rent supplement. The experiment is due to end in November 2026.The end of rent control
Zone tendue
High-demand area
- Municipality where the imbalance between housing supply and demand is marked, listed by decree. The classification brings specific rules: tenant's notice period reduced to one month, limits on rent increases on re-letting, and the possibility for the municipality to increase the residence tax on second homes and to introduce a tax on vacant dwellings.
IRL
Indice de référence des loyers: rent reference index
- Index published each quarter by INSEE, calculated from changes in consumer prices excluding tobacco and rents. It caps the annual rent review during the lease when the agreement contains an indexation clause. The review may be applied only once a year and is not retroactive beyond one year.
Dépôt de garantie
Deposit
- Sum paid by the tenant on signing the lease to cover any breaches of their obligations. It is capped at one month's rent excluding charges for unfurnished lettings and two months for furnished lettings. It must be returned within one month of the keys being handed back if the check-out inventory matches the check-in inventory, within two months otherwise, after deduction of justified sums.Landlord's guide
GLI
Garantie loyers impayés: rent guarantee insurance
- Insurance taken out by the landlord that covers unpaid rent, damage and litigation costs, within the limits of the policy. It cannot be combined with a joint and several guarantee, except when the tenant is a student or apprentice. Its cost is a percentage of the rent including charges and is deductible under the actual regime.Covesta property management
Assurance PNO
Propriétaire non occupant: non-occupier landlord insurance
- Insurance that covers the landlord's civil liability and damage to the dwelling not covered by the tenant's or the co-ownership's insurance, including during vacant periods. It has been compulsory for units in co-owned buildings since the ALUR law. Its premium is deductible from rental income.
Gestion locative
Property management
- All the operations entrusted by a landlord to an agent: letting, tenant selection, drafting the lease, inventories, collection of rents and issue of receipts, follow-up of arrears and claims, adjustment of service charges. It is governed by a written management mandate and remunerated by fees expressed as a percentage of the rents collected.Covesta property management
État des lieux
Inventory of condition
- Document drawn up jointly at the tenant's arrival and departure that describes the condition of the dwelling and its equipment, room by room. Comparison of the two reports is the basis for any deductions from the deposit. Since the ALUR law, a standard template and a wear-and-tear grid may be appended to it.
| Bail nu (unfurnished) | Bail meublé (furnished) | Bail mobilité (mobility) | |
|---|---|---|---|
| Term | 3 years (6 years if the landlord is a legal entity) | 1 year, or 9 months for a student | 1 to 10 months, non-renewable |
| Deposit | 1 month's rent maximum | 2 months' rent maximum | Prohibited |
| Tenant's notice period | 3 months, 1 month in a high-demand area | 1 month | 1 month |
| Tax category | Property income (revenus fonciers) | BIC (LMNP or LMP) | BIC (LMNP or LMP) |
| Simplified regime | Micro-foncier, 30% allowance | Micro-BIC, 50% allowance | Micro-BIC, 50% allowance |
Acquisition and financing
From the search mandate to the final deed of sale, by way of the loan.
Investissement locatif clé en main
Turnkey buy-to-let investment
- Support in which a single provider takes charge of every stage of a buy-to-let investment on the investor's behalf: search for and negotiation of the property, coordination of the renovation, furnishing, letting and management. The investor remains the owner and decision-maker, but delegates execution. Covesta carries out this activity in Paris, Montpellier, Marseille, Lille and Lyon.Invest with CovestaHow it works
Mandat de recherche
Search mandate
- Written contract by which a buyer instructs a professional holding the professional licence (carte professionnelle) to search for and negotiate a property on their behalf, in accordance with the Hoguet law. It specifies the search criteria, the term, the fees and the event that triggers them. Without a prior written mandate, no fee is due to the property finder.Sign a search mandate
Offre d'achat
Purchase offer
- Written proposal by which a buyer undertakes to buy a property at a given price, generally with a validity period and conditions. Once accepted by the seller, it constitutes agreement on the property and the price and leads to the signing of a preliminary contract. It involves no payment.
Compromis et promesse de vente
Preliminary sale contracts
- Preliminary contracts that set the terms of the sale before the final deed. The compromis binds both parties; the unilateral promesse binds only the seller in exchange for an option fee (indemnité d'immobilisation). In both cases, the non-professional buyer has a ten-day cooling-off period and generally pays a deposit of 5 to 10% of the price, held in escrow by the notary or the estate agent.
Condition suspensive d'obtention de prêt
Loan condition precedent
- Clause in the preliminary contract that makes the sale conditional on the buyer obtaining a loan with specified characteristics: amount, term, maximum rate. If the loan is refused within the period provided, of at least one month, the sale lapses and the deposit is returned. It is mandatory whenever the buyer finances with a loan, unless waived in handwriting.
Frais de notaire
Frais d'acquisition: notary fees and acquisition costs
- All the sums paid to the notary on purchase, consisting mainly of transfer duties passed on to the State and local authorities, then the notary's disbursements and fees. They represent around 7 to 8% of the price for existing property and 2 to 3% for new-build. Under the actual regime, they are deductible or depreciable.
Surface Carrez
Carrez law floor area
- Private floor area of a unit in a co-owned building, measured after deducting walls, partitions, ducts, staircases and areas where the ceiling height is below 1.80 metres. It must be stated in every preliminary contract and deed of sale of a co-ownership unit. If the actual area is more than 5% smaller than stated, the buyer may obtain a proportional reduction in the price.
Tantièmes
Co-ownership shares
- Share of the common parts attached to each co-ownership unit, expressed in thousandths or ten-thousandths. It determines how general charges are divided among co-owners and the weight of each owner's vote at the general meeting. It appears in the co-ownership regulations and the descriptive schedule of division.
Fonds de travaux
Works reserve fund
- Compulsory financial reserve in co-owned buildings, introduced by the ALUR law, funded by an annual contribution of at least 5% of the provisional budget. It finances works that have been voted or are urgent and remains the property of the co-owners' association: it is not refunded to the seller on a sale, unless the parties agree otherwise.
Taux d'endettement
Debt-to-income ratio
- Ratio between loan repayments, including insurance, and the household's net income. The recommendations of the Haut Conseil de stabilité financière (the French financial stability authority) limit this ratio to 35% and the term of property loans to 25 years, with a margin of flexibility for banks. The rents expected from a buy-to-let investment are generally counted at 70%.Financing conditions in 2026
Effet de levier
Leverage
- Mechanism by which borrowing makes it possible to acquire an asset worth more than the savings committed, with the rent contributing to repayment. Leverage is favourable when the property's yield exceeds the cost of the loan, and it amplifies losses when the reverse is true. It is what sets property apart from financial investments.
Conversion de bureaux en logements
Office-to-residential conversion
- Transformation of office premises into housing, subject to planning permission and a change of use. It makes it possible to create homes in well-located buildings whose offices are vacant, at an acquisition cost often lower than that of housing. It requires a prior technical study of the structure, the building services and local rules.Office conversion
Yield and performance
The indicators that measure what a property really earns.
Rendement brut
Gross yield
- Ratio between the annual rent excluding charges and the purchase price of the property, expressed as a percentage. It is the simplest and most widely used indicator, but it ignores charges, taxation and vacancy. It serves as a first filter for comparing properties.Yield simulator
Rendement net
Net yield
- Yield calculated after deducting the costs borne by the owner: property tax, non-recoverable co-ownership charges, insurance, property management, maintenance, and including acquisition and works costs in the total cost. It reflects the real performance of the property before tax.Yield simulator
Rendement net-net
Net-net yield
- Net yield after tax on the rents and social levies, calculated for the investor's precise tax situation and the regime chosen. This is the indicator Covesta presents for each transaction: it depends as much on the tax structure as on the property itself.Our properties and their yields
Cash-flow
Cash flow
- Monthly or annual difference between the rents collected and all outgoings: loan repayment, charges, insurance, management, taxes. A positive cash flow means the property finances itself and generates a surplus; a negative cash flow calls for a savings effort. Depreciation, which has no effect on cash, does not affect it.
Autofinancement
Self-financing
- Situation of a buy-to-let investment whose rents fully cover the loan repayment, the charges and the tax, with no cash contribution from the owner. It depends on the purchase price, the level of rent, the rate and term of the loan and the tax regime chosen.
Vacance locative
Rental vacancy
- Period during which a dwelling remains unoccupied between two tenants or for want of a tenant. It reduces the yield and is prevented by a property suited to local demand, a rent consistent with the market and early re-letting. Prudent simulations include a vacancy provision.
Energy and renovation
The DPE, renovation obligations and their consequences for letting.
DPE
Diagnostic de performance énergétique: energy performance certificate
- Document that assesses a dwelling's primary energy consumption and greenhouse gas emissions, rated from A to G. Drawn up by a certified assessor, it is valid for ten years and has been legally enforceable since 1 July 2021. Its rating determines the right to let, the rent review and, increasingly, the value of the property.Our approach to renovation
Passoire thermique
Energy-inefficient home
- Dwelling rated F or G on the DPE. The Climate and Resilience Act of 2021 gradually bans letting them: dwellings rated G since 1 January 2025, F from 2028 and E from 2034. Their rent can no longer be reviewed or increased on re-letting. These constraints make them renovation targets at a negotiated price.The DPE and the letting ban
Audit énergétique
Energy audit
- A more comprehensive study than the DPE, which proposes costed works scenarios to improve the dwelling's performance. It has been compulsory on the sale of a house or a building in single ownership rated F or G since April 2023, and E since 1 January 2025. It serves as the basis for the renovation programme.
Rénovation énergétique
Energy renovation
- All the works that reduce a dwelling's consumption: insulation of walls, roof spaces and floors, replacement of windows and doors, ventilation, an efficient heating and hot-water system. Covesta coordinates these works with vetted contractors, who bear the technical responsibility and the warranties for their work, with the aim of gaining several DPE ratings.Our approach to renovation
RGE
Reconnu garant de l'environnement: French energy-renovation qualification
- Qualification awarded to building firms trained in energy renovation, issued by accredited bodies. Using an RGE firm is a condition of access to most public renovation grants and to the interest-free eco-loan (éco-prêt à taux zéro).
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