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Airbnb rip-offs, tax cut to be scrapped?: 5 French property updates

We round up the latest from the French property sector

We also look at the updated squatted law, and how taxe foncière is affecting homeowners differently across France Pic: Pormezz / Agalma / Mr Doomits / viewimage / Shutterstock

Article published August 3, 2023

1. Squatter law clarified after confusion over property maintenance

France’s highest constitutional authority, le Conseil Constitutionnel, has said that a legal requirement on homeowners to maintain squatted properties has nothing to do with an obligation to provide comfort to the squatters.

Last week (July 26), the Conseil approved harsher legislation against squatters in main and second homes, including tripling the penalties for doing it, as part of a controversial new law to better protect property owners.

Read more: Boost for homeowners in France as anti-squatter law gets green light

It validated all clauses of the bill except for article 7, which would have released the owner from their responsibility to maintain a squatted property and would exonerate them in case of any harm resulting from lack of maintenance.

It prompted some commentators to speculate that squatters would now be able to demand the upkeep of properties they illegally occupy or obtain compensation from the owner if they are in a neglected state – an interpretation the Conseil Constitutionnel dismissed. 

Read more: Landlord held responsible by French court for squatter’s fall in flat

In a statement on its website, it clarified: “This is in no way the scope of the Conseil Constitutionnel’s decision which, by censuring Article 7 of the Act referred to, has the sole effect of maintaining the state of the law in this area, which is not the one described by these commentators.”

Rather, it said, the maintenance requirements are based on the need to ensure the rights of third party victims of damage remain protected.

Examples could include a passerby being injured by a falling roof tile, one lawyer said on Twitter. 

The lawyer explained that the vetoed article would have relieved the property owner (“who is solvent and probably insured”) of his or her responsibility to stop the building from becoming dangerous. Instead, liability would likely fall on the squatters, "who are generally insolvent and unable to maintain the property”. In some cases, the squatters' identitity is not even known, the Conseil had said.

As for whether squatters themselves could potentially use it to sue the owner if they were harmed, the lawyer noted that French law already takes into account whether a harmed third-party's own behaviour had contributed to what happened to them.

MPs from the left-wing political alliance la Nupes, who wanted to stop the new anti-squatting law, had requested the involvement of France’s constitutional council.

The law was initially proposed by Renaissance MP Guillaume Kasbarian and was passed in parliament on June 14.

In its latest clarification the Conseil constitutionnel also said its ruling did not mean MPs could never seek change in this area of law, for example by sharing the responsibility out between the owner and the squatters, if they wished to, as long as third-parties would remain effectively protected.

Its original ruling also noted that the proposed law would have let off owners from their responsibilities, even if they provided no proof that the squatting was preventing them carrying out maintenance, or that the harm resulted in a lack of maintenance caused by the squatters. It also let them off both for harm to the squatters and to everyone else.

2. Airbnb owners who overcharge could be exposed in listings

Inflated prices on short-term holiday rental platforms such as Airbnb may soon be flagged in the property listing.

From January 2024, tourists will be able to more easily identify accommodation priced above local averages, thanks to an alert.

This will likely take the form of a short message on the listing explaining to users that the property they are looking at does not fall within the normal price range for its size or situation on the same dates.

It will then be left to the user to decide if he or she wishes to proceed and book it.

"We are going to sign a commitment charter this autumn with the main platforms, including Airbnb," the office of the Minister for Tourism, Olivia Grégoire, told Le Parisien

It is hoped the move will stop opportunistic property owners in Paris from overcharging the large number of Olympic Games visitors expected in the city next summer.

Read more: Airbnb owners in France ditch site for new ‘no day limit’ platforms

Foreign tourists, especially, are likely to benefit from the scheme, assuming they have no prior knowledge of fair prices in the area.

For its part, Airbnb says the scheme will only make sense if it applies to all short-term holiday accommodation providers, including hotels.

3. Study shows impact of taxe foncière is greatest in smaller French cities

The extent to which France’s property owners' tax - taxe foncière - increases the cost of buying a property has been unveiled in a new study. 

Property website Meilleurtaux said in smaller French cities, such as Nîmes, Le Havre and Saint-Étienne, the tax has a bigger impact.

It took the example of a 70m² property and calculated repayments based on a full mortgage at current rates.

In Nîmes, the taxe foncière on this property - which is €1,674 - would add 15.6% on top of the annual mortgage costs.

The other high-ranking cities were Saint-Étienne (15.7%), Le Havre (12.7%), Dijon (11.5%), Le Mans (11.3%) and Grenoble (10.5%).

This is counteracted, however, by the fact that all of these cities have a relatively low price per m² for properties (less than €3,000 in all of them).

Because of the (comparatively) low cost of property in smaller French cities, taxe foncière is more impactful. 

It is the opposite in bigger cities. In Lille, the overall increased cost was only 4.7%, followed by Nice (4.5%), Lyon (3.6%) and finally Paris (1.4%), where prices are the highest in France.

A nationwide 7.1% increase is expected this year in the basic amount taxe foncière paid by the vast majority homeowners, although each commune can vary this (up or down) if it votes to alter the percentage rate it applies in the calculation of the tax.  This rise is based on a formula linked to inflation. The other main local property tax, taxe d’habitation, has now been scrapped for main properties in France. The latter remains in place for second homes.

Read more: Tax bills, traffic, school aid: Important dates in France this August

4. Government to end reduced VAT rate on renovations?

The reduced taxe sur la valeur ajoutée (TVA) rate on home renovations could soon come to an end as the French government looks to cut public spending. 

Scrapping the current rate – 10% – and aligning it to the standard 20% VAT rate is one of the ideas proposed by the Inspectorate General of Finances, asked by the government to come up with ways to reduce its expenditure. 

Currently, most costs associated with renovations on main or second homes more than two years old are subject to VAT reduction, including: 

  • Labour services
  • Raw materials and supplies (cement, glass wool, tiles or slates, tiling, wallpaper, paint, joints, screws, bolts, pipes, electrical wiring, etc)
  • Kitchen, bathroom and storage fittings (provided that they are incorporated into the building, and are impossible to remove without damaging the furniture or building)
  • Heating equipment (except oil tanks, or gas tanks/boilers)

Despite this, the reduced rate for environmentally-friendly renovations (only 5.5%) would be unaffected.

The VAT reduction is estimated to cost around €4.3billion per year and the Cour de Comptes - France's public spending watchdog - believes the reduction does not provide “proof of its relevance and effectiveness”.

However, France’s building industry federation - Fédération Française du Bâtiment (FFB) - believes scrapping the VAT reduction would impact homeowner’s purchasing power, create job losses and increase illegal employment in the building sector. 

Representatives of trades and small building firms, the confédération de l'artisanat et des petites entreprises du bâtiment (CAPEB) took a similar view. It said cancelling the policy would cause “a drop in activity for construction companies, which have already been experiencing a decline in their business for a year”.

On top of this, it would exacerbate “France's inability to achieve its targets in terms of housing supply.” 

Read more: What approval must I get to install an indoor swimming pool in France?

5. Airbnb called back to court for failing to take tourist tax

Property rental platform Airbnb is back in court again over unpaid tourist taxes to authorities on the French island of Oléron.

Just two months ago, it paid backdated taxes from 2020 and 2021, as well as a €30,000 fine.

The new case, however, revolves around unpaid tourist taxes for 2022, which the island claims totals €136,012, for 2,344 overnight stays on the island using the platform. 

Furthermore, the island is suing for almost €6 million in fines. The French legal code for local authorities states that “failure to remit the amount of tourist tax may result in a fine of up to €2,500 but not less than €750” for each offence. 

The island already attempted to sue Airbnb for €30 million for this reason in the previous court case, but the company was eventually issued a €30,000 fine instead. 

The Communauté de communes de l'île d'Oléron - an authority which brings together the island’s communes and is taking Airbnb to court - stated that the company was already “aware” of a fault in its booking system that meant tourist tax was not correctly levied, as its reservation system was modified partway through the year. 

For its part, Airbnb said irregularities with the booking system “had been resolved”. 

It is not just Airbnb that is concerned. Communes on the island also have cases against and Le Bon Coin, for the same reasons.

Read more: Airbnb owners in France ditch site for new ‘no day limit’ platforms

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