Monaco regulates the rental of part of its older properties through a unique protective framework. Law No. 887, enacted on 25 June 1970, is one of its cornerstones. It sets clear rules: who can rent, for how long, and under what conditions. This guide explains everything about this law, whether you are a tenant or a landlord.
Monaco is one of the most densely populated and expensive territories in the world. Without protective mechanisms, long-term residents would struggle to remain housed in the Principality. Law 887 was created to prevent this. It guarantees access to housing for certain eligible residents. It applies to older buildings constructed before 1 September 1947. These properties make up what is known as the protected sector of Monaco’s real estate market.
Law 887 applies exclusively to rental relationships. It has no impact on property purchase or sale transactions. Anyone can buy an apartment subject to this law. However, if the owner wishes to rent it out, they must comply with specific rules regarding tenant eligibility and lease conditions.
Law 887 coexists with two other legal frameworks that regulate housing in the Principality. Law No. 1.235, as amended by Law No. 1.291, applies to the protected social sector. In this framework, rents are set by the administration and tenants are selected according to a strict priority order. The free sector, meanwhile, covers all buildings constructed after 1947. No specific restrictions apply there. Law 887 sits between these two extremes. It maintains tenant eligibility criteria, while leaving landlords free to set the rent.
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Law 887 applies to housing located in buildings constructed or completed before 1 September 1947. This is the only determining criterion. Any building delivered after that date falls under the free rental sector. In practice, the properties concerned are found in older bourgeois-style residences. They are mainly located in historic districts such as Monte-Carlo, La Condamine, or Le Rocher. These apartments are often spacious, with high ceilings. However, they rarely include amenities such as parking, lifts, or swimming pools.
Older buildings subject to this law are becoming increasingly rare. They are gradually being demolished to make way for new developments, which automatically fall under the free rental sector. This trend mechanically reduces the rental supply available to eligible residents. It also increases the asset value of properties that remain under this regime.
The legal status of a property is normally indicated in the listing or by the seller. If it is not, several clues can help identify it. The year of construction, the absence of modern amenities, or a location in a historic district are strong indicators. In case of doubt, a real estate professional in Monaco can confirm the exact legal regime. The Housing Department can also be consulted.
Properties under Law 887 can only be rented to individuals who fall within specific legally defined categories. The official text is available on Legimonaco. Four categories are eligible:
Unlike Law 1.235, there is no strict priority order between these categories. The owner is free to choose among eligible candidates.
The question of residence is often a source of confusion. Our article Renting in Monaco without being a resident answers it in detail.
Proof of eligibility must be provided to the Housing Department. Documents vary depending on the profile:
The tenant must personally occupy the property. Subletting is prohibited unless expressly authorised by the administration. However, the law allows a mixed-use arrangement under certain conditions. A tenant may use the property as a primary residence while carrying out a liberal profession there, provided the building’s co-ownership rules allow it and the primary use remains residential.
Any lease signed under Law 887 must have a minimum duration of 6 years. This is a fundamental safeguard for tenants, ensuring housing stability in an extremely tight rental market. From the second year onwards, the tenant may terminate the lease annually at their sole discretion, without having to justify their decision. The landlord, on the other hand, may only give notice in specific cases: demolition for reconstruction, building elevation, or works making the property uninhabitable. Enhanced protection applies to tenants over 65 or with a disability: the landlord cannot exercise their right to reclaim the property during the first 6 months of the lease.
For a full understanding of lease termination and renewal procedures in Monaco, see our guide on lease renewal and termination in Monaco.
This is one of the distinctive features of Law 887. The rent is neither capped nor set by the administration. The amount is freely negotiated between the landlord and the tenant. In practice, these rents are often lower than those in the free rental sector. This is mainly because the eligible tenant pool is restricted, which naturally limits upward pressure on prices.
The lease may include an annual indexation clause. It allows the rent to be adjusted each year based on changes in the consumer price index (excluding tobacco) published by INSEE. This increase is capped at that variation, protecting the tenant from excessive rent hikes.
To go further on this topic, see our dedicated page on rental costs in Monaco: security deposits, charges, and additional expenses to expect.
Even though the rent is freely set, the rental conditions must be approved by the Housing Department before any lease is granted. This “visa” confirms that the lease complies with the provisions of Law 887. Without this step, the lease may be challenged. It applies to every new rental of the property.
When a property under Law 887 becomes vacant, the landlord must declare it to the Housing Department within 8 days of the tenant leaving. This deadline is set by Ordinance No. 4.621 of 29 December 1970. If no declaration is made within 3 months, a fine of €50,000 may be imposed. Unless there is a legitimate reason, the property must be re-let within 3 months of the declaration. These rules reflect the authorities’ intention to keep this rental stock actively in circulation.
For each new letting, the landlord must complete the “Declaration of Rental” form (No. 362-0014_01-2020) and submit it to the Housing Department together with the tenant’s supporting documents. The procedure can be completed online via the Mon Service Public Monaco portal, by post, or in person at 10 bis, quai Antoine 1er, Monaco (tel. +377 98 98 80 08). The Housing Department reviews the file and confirms compliance. The rental can only take effect once this approval has been granted.
Renting a property to an ineligible tenant, or without prior declaration, constitutes an offence. The criminal penalties are set out directly in Law 887 itself. This framework protects eligible residents and ensures the integrity of Monaco’s protected rental sector.
The Monegasque rental market is divided into three main categories, each with its own rules.
The free sector applies to buildings constructed after 1 September 1947. The landlord freely chooses the tenant, sets the rent and determines the lease duration. Almost all new developments fall under this sector.
Law 887 applies to older high-quality buildings constructed before 1947. The tenant must belong to one of the eligible categories. The lease is a minimum of 6 years. However, rent is freely set between the parties. It is an intermediate regime.
Law 1.235 / 1.291 also applies to older buildings, with a stronger social purpose. Beneficiaries are selected according to strict priority rules, primarily in favour of Monegasques. Rent is set by the administration. This regime offers maximum protection for tenants but the strictest constraints for landlords.
For an eligible tenant, Law 887 provides real stability. The 6-year lease protects against abusive termination. The regulated indexation prevents sudden rent increases. And administrative oversight by the Housing Department ensures a formal and secure framework.
Under Law 887, the landlord retains freedom to set rent. This is not the case under Law 1.235, where rent is administratively controlled. The landlord can also freely choose among eligible candidates, without following a priority order. This system is more balanced between social protection and contractual freedom.
Properties under Law 887 are generally acquired at a lower price per square metre than those in the free sector. This discount is explained by the constraints imposed on landlords. For a long-term investor, it represents a lower-cost entry point into the Monaco real estate market. By comparison, the 2025 Real Estate Observatory from IMSEE indicates that the average price per square metre exceeds €57,500 in 2025 across the entire market. Newer properties reach €65,602 per square metre. Law 887 properties therefore allow access to the Principality at significantly lower levels than these benchmarks.
The profile of eligible tenants ensures structurally sustained demand. Monaco nationals, long-term employees, and resident families cannot easily find comparable housing conditions elsewhere in the Principality. As a result, the risk of long vacancy periods is low. The clear legal framework also reduces disputes and simplifies day-to-day property management.
However, investors must take certain limitations into account. Rental yields are often lower than in the free sector. Short-term rentals are not allowed. Tenant selection is restricted, and each change of tenant involves administrative procedures. A Law 887 property is therefore primarily a long-term asset, suited to investors who prioritise stability over immediate returns.
The property’s legal status is usually indicated in the listing or by the seller. A building dating from before 1947, without parking or a swimming pool, and located in one of Monaco’s historic districts is very often covered by this regime. Working with a real estate agency specialised in Monaco helps confirm this status before any commitment is made. You can also browse our available rental properties in the Principality.
The prospective tenant must ensure they fall within one of the categories defined by law. It is recommended to gather all supporting documents in advance. This speeds up the process once a suitable property has been identified.
The landlord freely sets the rent. Both parties agree on the terms of the contract. The lease must include a minimum duration of 6 years. An indexation clause may be included. The agreed terms must then be submitted for approval by the Housing Department.
The landlord submits the rental declaration form to the Housing Department, together with the tenant’s supporting documents. The process is available online via the Mon Service Public Monaco portal. The Housing Department reviews the file and issues its approval. The rental can only take effect after this validation.
Buying a property under Law 887 involves no restrictions if you intend to live in it yourself. The rules only apply when renting the property to a third party. As long as you occupy the property personally, you are free to live in it without eligibility conditions or specific administrative requirements. The law only becomes applicable at the moment you decide to let it out. This allows you to purchase at a price often below the free market, live in the property peacefully, and later turn it into a regulated rental investment when the time comes.
When purchasing real estate in Monaco, whether or not it is subject to Law 887, the Monegasque State holds a right of pre-emption. In practical terms, after the preliminary sale agreement is signed, the State has a four-week period to step in and purchase the property under the same conditions as the buyer. This right is rarely exercised, but it must be taken into account in the transaction timeline. It can delay the signing of the final deed by approximately one month. A Monegasque notary will guide you through the required procedures at this stage.
Yes. If the landlord decides to sell the property while it is occupied, the current tenant may benefit from a priority right. This means they must be informed of the sale and are given priority to purchase the property before any other buyer. This mechanism protects eligible tenants from eviction due to a resale.
Yes, under certain conditions. An eligible tenant may occupy the property as their main residence while also carrying out a liberal profession there, such as a doctor, lawyer, or consultant. This is only allowed if the building’s co-ownership rules permit it and the primary use remains residential.
Yes, if the lease provides for it. An annual indexation clause may be included in the contract. It allows the rent to be adjusted each year according to changes in the consumer price index published by INSEE. This increase is capped at that variation. Without such a clause, the rent remains fixed for the entire duration of the lease.
At the end of the lease, the landlord may choose not to renew it. They are not required to justify their decision, but must respect the notice period set in the contract, usually 3 to 6 months. If neither party expresses a wish to terminate the lease, it is automatically renewed for another 6-year period.
No. Short-term or seasonal rentals are not compatible with the Law 887 regime. The lease must have a minimum duration of 6 years. Any short-term rental would violate the law and expose the landlord to sanctions.
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