Paris City Hall Approves Surtax on Vacant Housing to Boost Market Supply
Paris, July 18 – In a move aimed at addressing the city’s housing shortage, Paris City Hall on Saturday, July 18, officially approved a new surtax on vacant housing. This measure, which has been described as a “major victory after 10 years of struggle” by Jacques Baudrier, Deputy Mayor of Paris for Housing, seeks to encourage owners of an estimated 20,000 vacant properties to make them available to residents.
The new local tax is set to come into force on January 1, 2027, replacing the existing vacant housing tax that has been in place since 1999. According to the City of Paris, a property that has been vacant for at least one year in a municipality where housing supply does not meet demand will become taxable.
Increased Tax Rates for Long-Term Vacancy
The new legislation introduces progressive tax rates: 17% for the first year of vacancy and 34% from the second year onwards. However, municipalities have the option to increase these rates to 30% and 60% respectively. Paris City Hall has opted to activate these higher rates through a deliberation presented to and adopted by the Council of Paris.
The calculation of this tax is based on the cadastral rental value of the property. For instance, an empty 30 m² apartment in the 17th arrondissement, which currently incurs a standard tax of 790 euros, will see its tax increase to 1,400 euros in 2027 under the new surtax, and further to 2,800 euros from 2028 if it remains vacant.
Impact on Property Owners and the Housing Market
This initiative is expected to significantly impact property owners in Paris, particularly those holding vacant residences for extended periods. The city government hopes that the increased financial burden will serve as a strong incentive for owners to rent out or sell their properties, thereby increasing the supply of available housing in a highly competitive market.
The decision comes amidst ongoing discussions about housing affordability and availability in the French capital. With a persistent demand for housing outstripping supply, the city is exploring various strategies to alleviate pressure on the market and ensure more residents have access to suitable accommodation.
Broader Context of Housing Policies
The implementation of this surtax is part of a broader effort by Paris City Hall to regulate the housing market and address issues related to urban planning and social equity. Previous discussions, as highlighted by Emmanuel Grégoire, First Deputy Mayor of Paris, included proposals to double the existing tax on vacant housing, indicating a sustained focus on this issue.
The city’s approach aligns with similar measures being considered or implemented in other major urban centers grappling with similar housing challenges. By making it more costly to keep properties vacant, Paris aims to stimulate a more dynamic and responsive housing market for its residents.
The effectiveness of this surtax in significantly increasing housing supply and easing market pressures will be closely monitored in the coming years as the new rates come into effect.
