In Monaco, real estate is an exceptional sector. But behind the record prices and prestigious residences lies a unique set of regulations. These rules are part of a long-term policy implemented by the Principality to ensure stable and affordable housing for its most established residents.
Among these regulations, Law No. 1.235, amended by Law No. 1.291, plays a central role in the protected rental sector of the Monegasque housing market. Unlike the free market, where rents and terms are freely negotiated, properties subject to Law 1235/1291 are tightly regulated. This legal framework mainly concerns apartments located in buildings constructed before September 1, 1947. For buyers wishing to reside there, such properties often present an opportunity to purchase below free market prices.
Other laws, such as Law 887, also contribute to this regulation, with different but complementary criteria and procedures.
Who can rent an apartment under Law 1235/1291?
One of the key aspects of this regulation is the precise definition of eligible tenants, referred to in the law as “protected persons.” Priority is given to individuals with a strong and lasting connection to Monaco. The priority order is as follows:
- Monegasque nationals : They have top priority access to these apartments in recognition of their status in the Principality.
- Persons with a Monegasque parent
- “Children of the Country” : Those born in Monaco who have lived there continuously since birth. Even without Monegasque nationality, their local roots grant them access.
- Spouses of Monegasque citizens : Whether married, widowed, or widowers, they can also rent under this scheme, without needing to prove previous residence duration.
- Residents for over 40 years : Any person who has lived continuously in Monaco for at least 40 years.
It is the responsibility of the property owner, or the appointed management agency, to submit all supporting documents to the Housing Department proving the eligibility of the potential tenant. This administrative step is mandatory and is a prerequisite for lease validation. It ensures that only residents meeting the legal requirements can occupy the regulated apartments.
Some individuals who were already tenants or primary occupants at the time the law was enacted may also retain their status as protected tenants on a personal, non-transferable basis.
To qualify as a protected tenant, one must not only belong to one of these categories but also must not own another suitable residence either in Monaco or, in some cases, in neighboring municipalities. For “children of the country” with foreign nationality, income thresholds also apply and are set annually by sovereign ordinance.
Specific Rules for Apartments under Law 1235/1291
Renting under this regime involves complying with a very structured legal framework, for both tenant and landlord.
- Lease duration and termination conditions
The lease must be for a minimum of six years and is automatically renewed unless terminated following legal procedure. The tenant may terminate the lease at any time with three months’ notice. This ensures residential stability without restricting tenant mobility.
- Rent setting
The rent must be set from the outset by comparison with similar properties (same area, features, and legal regime). Any rent increase must follow strict rules and cannot exceed certain limits tied to the consumer price index. In case of disagreement, the rent arbitration commission may be consulted.
- Strict control of lease terminations
The owner can only terminate the lease in limited cases: to undertake major works, demolish or extend the building, or reclaim the apartment for personal or family use. In all cases, the landlord must offer equivalent rehousing to the evicted tenant under the same conditions.
- Preemptive right of the State of Monaco
When a property under Law 1235/1291 is put up for sale, the State of Monaco has a right of first refusal, allowing it to purchase before any other buyer under acceptable terms. This ensures these properties remain within the protected rental sector and accessible to eligible residents.
Wealth Strategy: Buying a Property under Law 1235/1291
Owning a property under Law 1235/1291 in Monaco involves some regulatory constraints, but it can also offer strategic advantages, particularly when buying.
These types of properties are typically sold below free market value due to rental restrictions, making them attractive investment opportunities—especially for those seeking to build a long-term asset in the Principality.
Any sale of a property under this law must be declared to the Minister of State, who holds a preemptive right, meaning the State can purchase it first to preserve the protected housing stock.
How to Rent Out a Property under Law 1235/1291
Renting out a property under Law 1235/1291 involves following a regulated procedure. The owner must comply with several steps:
- Declare any vacancy to the Housing Department
- Obtain a certificate of compliance (safety and hygiene) before listing the property
- Submit the listing to the Journal de Monaco
- Wait for eligible applications according to the legal priority order
Once a tenant is selected, the lease agreement must be endorsed by the Housing Department before signing. Any breach of these procedures may lead to criminal or administrative penalties.
An owner who wishes to use the property personally (as a primary or secondary residence) is not subject to the eligibility criteria that apply to tenants. This flexibility is a key advantage: it allows for the purchase of a regulated property at a contained price, while retaining the freedom to reside there.
A Regulated but Strategic Market in Monaco
Law 1235/1291 is an integral part of Monaco’s housing policy. By ensuring fair access to housing for Monegasques and long-term residents, it helps maintain social diversity and preserve local identity. For eligible tenants, it offers a unique chance to secure housing under favorable terms in a stable environment. For owners, it presents attractive buying opportunities, even if renting is subject to strict regulation.
At Miells Christie’s International Real Estate, we have the legal expertise and network required to assist you with the acquisition, rental, or management of this type of property. Our team is here to assess your situation, prepare all regulatory documents, and guide you every step of the way. Don’t hesitate to contact us to explore the opportunities offered by Monaco’s protected housing sector.
