Monaco’s real estate legal framework is based on several laws regulating its unique rental market. Among them, Law 887 of 1970 plays a central role in defining the regime of protected sector apartments, which are primarily available to Monegasques and long-term residents.
What is Law 887?
Monaco has a unique real estate legal framework, structured by multiple legislations designed to regulate the housing market. In this small 2 km² territory where space is limited, lawmakers have established a set of specific laws to cater to the needs of various resident categories. Among them, Law 1235 governs free-sector residential leases, while Law 887, enacted on June 25, 1970, plays a crucial role in protecting Monegasque tenants and equivalent residents.
Applying mainly to buildings constructed before September 1, 1947, this law aims to provide favorable rental conditions for Monegasques and long-term residents, ensuring more affordable housing access in a market where real estate pressure is high and prices rank among the highest in the world.
Characteristics of Apartments under Law 887
Apartments governed by Law 887 have several distinctive features:
- Lease Duration: Leases for these apartments have a minimum term of six years, automatically renewable. Tenants benefit from strong security, as only they can terminate the lease during this period, except in exceptional cases defined by law. After six years, the owner may choose to re-rent the property, occupy it, leave it vacant, or sell it.
- Rental Conditions: These apartments can only be rented to individuals meeting specific criteria. This includes Monegasque nationals, residents who have lived in Monaco for at least five years and have been working there for over six months, as well as the property owner’s ascendants or descendants.
- Rent Determination: The rent amount can be freely set by the property owner.
- Right of First Refusal: In case of sale, the State has a right of first refusal for four weeks following the signing of a preliminary sales agreement. If the State does not exercise this right, the tenant is then granted a preemptive right, allowing them to purchase the apartment under the same conditions as the prospective buyer.
Who Can Rent an Apartment Under Law 887?
To be eligible for a lease under Law 887, the tenant must meet one of the following criteria:
- Be an ascendant, descendant, or spouse of the property owner
• Be of Monegasque nationality
• Have worked in Monaco for at least five years
• Have lived in Monaco for over five years and been professionally active for more than six months
This system promotes housing access for long-term residents and Monegasques. Renting an apartment under Law 887 provides valuable security and stability for tenants. With a minimum lease term of six years, residents enjoy long-term stability without the risk of unexpected eviction.
How to rent out an apartment under Law 887?
To rent out an apartment under Law 887, several steps must be followed. The owner must first submit a rental offer to the Housing Department, along with a certificate from an inspection body issued within the last year. Once a tenant is found, the owner must complete a rental declaration form, indicating the selected candidate. This form must then be submitted to the Housing Department. Finally, the lease agreement must comply with the provisions of Law 887, particularly regarding the minimum six-year duration and termination conditions.
Acquiring an apartment under Law 887: an opportunity to seize
Acquiring an apartment under Law 887 in Monaco presents a unique opportunity for savvy investors. While subject to certain legal constraints, this type of property offers significant advantages, starting with a purchase price often several hundred thousand euros lower than the free market. In a market where real estate prices are soaring, this alternative provides access to charming properties, often located in historic buildings with spacious rooms, high ceilings, and even private gardens – a rare luxury in the heart of the Principality!
Before finalizing a purchase, it is essential to fully understand Monaco’s legal framework. Law 887 properties are reserved for eligible tenants based on strict criteria, which limits the owner’s freedom in terms of renting and setting rental prices. However, if you plan to live there with your spouse, no rental restrictions will apply to you: you can fully enjoy your property without any leasing constraints.
From an investment perspective, these apartments benefit from high rental demand due to the scarcity of protected housing, and their long-term appreciation is promising, with minimal risk since Monaco’s real estate market consistently retains its value. Additionally, strict rental regulations minimize disputes and simplify property management.
Finally, property selection is key: a terrace with a view, parking, a spacious kitchen, or renovated bedrooms are all factors that can make a difference. Law 887 buildings, often located in Monaco’s most iconic neighborhoods, can hold excellent surprises. Knowing where to look and having the right guidance can turn this legal constraint into a genuine asset for your real estate portfolio.
Miells Christie’s International Real Estate is at your service to help you rent or acquire a property under Law 887, with the support of our expert legal team, offering personalized advice tailored to your specific situation.
