Empty Homes Taxes in France
France, like numerous countries globally, grapples with housing challenges, marked by a scarcity of affordable homes and mounting concerns about unoccupied properties. In response to these issues, the French government has enacted taxes on vacant homes to motivate property owners to reintegrate their unused properties into productive use.
Known as Taxe Sur Les Logements Vacants (TLV) in French, empty homes taxes are measures aimed at mitigating housing scarcity by dissuading property owners from leaving their homes vacant. Enacted in the early 2010s, these taxes are structured to prompt property owners to either inhabit, rent, or sell their homes, thereby contributing to the overall housing supply.
1. Calculations: The tax is typically computed as a percentage of the property’s assessed rental value and is levied annually. The percentage varies depending on the duration of property vacancy, with higher rates for prolonged periods:
17% for the initial taxable year.
34% in subsequent years.
2. Exemptions and Exceptions: Certain properties are exempt from the empty homes tax, such as primary residences, properties undergoing renovation, and those used for specific purposes like seasonal rentals. It does not apply if the property is a furnished second/holiday home on which the taxe d’habitation is paid.
3. Local Variations: The implementation and specifics of the empty homes tax can vary across different municipalities in France. Local authorities have the flexibility to tailor the tax to the specific needs and challenges of their regions.
Another tax, Taxe D’Habitation Sur Les Logements Vacants (THLV), can be introduced in municipalities where TLV is not applicable.
The THLV is payable by owners of residential property left vacant for more than two consecutive years from the 1st of January of the tax year. The tax rate corresponds to the taxe d’habitation of the municipality. Properties inhabited for more than 90 consecutive days, experiencing involuntary vacancy (the owner is seeking a tenant or a buyer), requiring major work to be habitable (greater than 25% of the property’s value), and furnished second/holiday homes subject to housing tax are not affected by the THLV. Property owners receive a notice informing them of the applicable tax amount.
Impact on Housing:
Encouraging Occupation: By imposing financial penalties on vacant properties, the empty homes tax acts as a potent incentive for property owners to make their homes available for occupation, thus mitigating housing shortages and fostering vibrant communities.
Boosting Rental Markets: The tax motivates property owners to consider renting their vacant homes, thereby augmenting the availability of rental properties. This proves particularly advantageous for individuals seeking affordable housing solutions.
Economic Stimulus: The reactivation of vacant properties through occupation or rental can stimulate economic activity in the construction and real estate sectors. It contributes to the overall economic health of communities by generating jobs and increasing local spending.
While empty homes taxes are viewed as a positive step toward addressing housing shortages, critics argue that they may not offer a comprehensive solution. Some property owners may encounter challenges in finding suitable tenants, and others may opt to keep their properties vacant for personal reasons.
Empty homes taxes in France embody a proactive approach to tackling housing challenges by incentivising property owners to make their homes available for occupation or rental. While the efficacy of these measures is still under evaluation, they play a pivotal role in shaping a more sustainable and accessible housing market for the future.
