Ceiling of renewed rent: independence of the cause and its effects!

By a judgment of 18 September 2025, the Court of Cassation confirmed, or even clarified, its position on taking into account the evolution of local factors of commerciality allowing the de-capping of the revised rent: a favorable impact on commercial activity is sufficient, even without an effective and real impact on the business operated on the premises.

Rent cap: a protective mechanism for the tenant

The principle of rent capping is one of the essential protections of the status of commercial leases (Article L.145-34 of the Commercial Code).

During the renewal of a lease, the rent can in principle only increase within the limit of the variation of the Commercial Rent Index (ILC) or the Tertiary Activities Rent Index (ILAT), thus protecting the lessee against excessive increases.

This is the rent cap.

However, there are exceptions to this protective mechanism.

The removal of the ceiling allows the lessor to obtain the fixing of the rent at the actual rental value, without being limited by the variation of the CLI or the ILAT.

Among the causes of uncapping provided for by Article L. 145-34 of the Commercial Code, there is a significant change in one of the elements determining the rental value, including local commerciality factors (L.145-33 of the Commercial Code).

According to Article R.145-5 of the Commercial Code, “Local factors of commerciality mainly depend on the interest of the business in question, the importance of the city, district or street where it is located, the place of its establishment, the distribution of the various activities in the vicinity, the means of transport, the particular attractiveness or constraints that the location may present for the activity in question and the changes that these elements undergo in a lasting or temporary manner. 

The assessment of local factors of commerciality has evolved in case law.

Consistently, the Court of Cassation held that the “significant modification of local commerciality factors can only constitute a reason for de-capping the new rent insofar as it is likely to have a favorable impact on the commercial activity carried out by the lessee“. (Cass. civ. 3^rd 14 Sept. 2011, No. 10-30.825, Bull.; Cass. civ. 3^rd, 14 Sept. 2017 No. 16-19.409).

By its judgment of 18 September 2025, the High Court clarified its assessment of the impact of the significant change in local commercial factors. Gouache explains.

The facts

In the case judged on September 18, 2025, Company X, carrying out an activity of sale and exhibition of lighting fixtures, was a tenant of commercial premises belonging to the company Diffusion des produits du bâtiment, landlord.

The lessor accepted the principle of renewal, but offered a rent higher than that offered by the tenant.

It assigned the lessee to fix the price of the renewed lease.

The judicial expert noted the demographic change, the increase in the tourist activity of the municipality and the flow of vehicles due to the opening of a new commercial area

The Paris Court of Appeal, in its judgment of 25 January 2024, held that these developments had a beneficial impact on commercial activity, which allowed the de-capping of the rent.

The Lessee appealed to the Court of Cassation, contesting that it was sufficient that the significant change in local commerciality factors be “likely to have an impact on the commercial activity carried out by the Lessee” without it actually having any.

The Court of Cassation dismissed the appeal and stated that”It follows from Articles L. 145-34 and R. 145-6 of the Commercial Code that the significant modification of local commerciality factors constitutes a reason for de-capping the price of the renewed lease if it is likely to have a favourable impact on the commercial activity actually carried out by the tenant, regardless of its actual and real impact on the business operated on the premises“.

This formulation deserves careful analysis. The Court makes a fundamental distinction between two concepts:

• The potential favourable impact: it is sufficient that the modification is objectively likely to favour the type of activity carried out
• Actual and real impact: the concrete impact on turnover or profitability of the trade does not have to be demonstrated

Conclusion

The judgment of 18 September 2025 enshrines an objective and predictable approach to de-capping based on the evolution of local factors of commerciality. The Court of Cassation favours an in abstracto analysis centred on the commercial potential of the location rather than on the actual results of the tenant.

For landlords, this case law can considerably facilitate the demonstration of the merits of a request for removal of the ceiling: the landlord may limit himself to establishing that the change in the commerciality factors observed is likely to have a favourable impact on the trade carried out, without having to prove that the tenant has actually benefited from it.

For policyholders, this solution may appear rigorous, especially when they have not been able to take advantage of changes in their business environment.

In the event of a request for removal of the ceiling, the litigation strategy should focus on demonstrating the absence of significant modification or its unfavourable nature, rather than the absence of concrete impact on their trade.

Moreover, in a very recent judgment obtained by the firm Gouache (CA Versailles, November 5, 2025, No. 23/07849), the lessee avoided the de-capping of its commercial rent on the grounds that “Such a modification, the proof of which lies with the lessor company, must have occurred during the expired lease, in this case between 2012 and 2022, and be likely to have a favorable impact on the commercial activity carried out by the lessee, […]

It should therefore be noted, without the need to resort to a judicial expertise in order to analyse the evolution of local commerciality factors, that the lessor company fails to establish a significant modification of local commerciality factors during the term of the expired lease, between 2012 and 2022. It follows that there is no need to de-cap the rent and that the rent of the renewed lease must be fixed according to the variation of the indices as provided for in Article L. 145-34 of the Commercial Code, i.e. the sum of xx euros per year excluding taxes and charges corresponding to the capped rent. ».

Cass. 3rd civ., 18 September 2025, No. 24-13.288