“Loi de simplification de la vie économique” (Economic Simplification Act) — how the SVE affects commercial leases in France

The Economic Simplification Act (SVE) was promulgated on 26 May 2026 and published in the Journal Officiel on 27 May 2026. This legislation shifts the balance in favour of tenants of retail, wholesale and commercial service premises in a number of important respects. Even where certain measures formally apply only to future leases, they create an immediate opportunity for tenants to open discussions with landlords. 

Here we set out the reasons why tenants should enter into such discussions, and highlight potential future legislation which may ban landlords from passing on property tax to tenants.

Provisions in the SVE applicable to retail and wholesale businesses and commercial or craft services

1. Monthly rent payments

Immediately applicable – all current leases

As a tenant of commercial premises, you may now unilaterally switch to monthly rent payments, without the landlord’s prior agreement, provided there are no undisputed arrears. This request takes effect from the next rent due date.

Action that a tenant can take

Send a formal request to your landlords across your entire portfolio if wish to switch to monthly rent payments. No negotiation is required – this is a right.

2. “Cap and collar” clauses for ILC rent indexation

New / renewed leases – renegotiation leverage for current leases

The Act validates "cap and collar" clauses that symmetrically cap - both upward and downward - the annual variation of the Commercial Rents Index (ILC) published by INSEE, France's national statistics institute, during triennial or annual reviews. Previously legally uncertain and subject to various case law, this mechanism is now secured.

Action that a tenant can take

Check your cap and collar clauses if such clauses are already in place. If not, consider negotiating them - from a tenant's perspective, a rent cap limits exposure to excessive rent increases, especially in the context of normalising inflation. Looking at the 5-year trend, the ILC rose almost continuously until Q4 2025: a rent cap clause would have provided significant protection during that period.

3. Cap on guarantees at three months

New / renewed leases — renegotiation leverage for current leases

Guarantees of any kind (security deposit, on-demand guarantee, bank guarantee) securing the performance of leases are each capped at one quarter's rent.

Action that a tenant can take

Whilst the cap applies formally to new and renewed leases only, it constitutes a negotiating lever on existing leases - either proactively or timed to coincide with a break option exercise. Anticipate the landlord's likely counter-proposal: a landlord insurance policy covering unpaid rent and recharged as a service charge, which may prove less costly than the annual first demand bank guarantee (GAPD) fees. Running this calculation in advance allows the tenant to assess whether to accept or resist.

4. Return of guarantees at lease end

Applicable to key handovers occurring three months after promulgation

The landlord is now required to return the security deposit within a period not exceeding three months from the handover of the keys. Other guarantees must be returned within six months.

Action that a tenant can take

For any upcoming lease exit, formally request the return of guarantees upon key handover, relying on the statutory time limits now enforceable against the landlord. In leases being negotiated or renewed, seek to insert daily penalty interest for any delay beyond these deadlines – absent from the law itself, this significantly strengthens the tenant's position should the landlord accept it.

5. ERP regulations – simplified works approval

Decree awaited

For establishments open to the public (ERPs) under 300 sqm equipped with an appropriate fire suppression system or located in a railway station, works are now subject only to a simple declaration of conformity with accessibility and fire safety rules, certified by an independent third party, rather than a full administrative authorisation.

Action that a tenant can take

Integrate this into your works calendar. And since this simplified regime does not dispense with the landlord's prior authorisation under the lease, ensure that lease terms require the landlord to issue its authorisation within a shorter timeframe — there is no longer any justification for conditioning approval on the outcome of a lengthy administrative process.

Matter to watch: Property Tax – the debate is not over

The initial proposal in the SVE to ban landlords from passing on property tax to tenants was dropped during the legislative process, leaving the current system unchanged. However, a separate legislative proposal (No. 2331, introduced on 13 January 2026) has reignited the debate: it aims to cap the passing-on of property tax on built properties at 50% of its amount, with a prohibition on any offsetting adjustment to the rent.

What action should tenants take? Monitor this proposal closely - depending on the scope of the law, you may be in a position to request an immediate reduction in recoverable charges. If adopted, anticipate and resist any landlord attempt to offset this reduction through other recoverable cost mechanisms.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.