House prices, empty homes tax, energy concerns: French property update

Price of property is falling in large towns and cities in France

Some 18 of the 35 largest cities in France have recorded a slump in property prices over the last three months, according to the national estate agency MeilleursAgents.

The biggest falls during this period were recorded in Mulhouse (-3.4%), Nîmes (-3.1%) and Rouen (-3.1%).

The agency has seen the largest annual fall, meanwhile, in Bordeaux with a drop of 3.1%.

Read more: Small towns escape price rise slowdown: French property market trends

The trend has been noticed by other agencies too, with Century 21 revealing that the price of its properties has fallen by 1% to 3% since September in many cities, reports Capital.

It, too, singled out Bordeaux properties as having taken the biggest hit as well as those in Nantes, Lyon and Paris.

Concerning the latter, Century 21 says the average price per square metre of property (excluding new builds) in the capital has recently fallen below €10,000 to €9,758. This compares with €10,348 on January 1, 2022.

According to MeilleursAgents, only a few cities have shown price rises over the last three months. Among these are Grenoble (+3.0%), Marseille (+2.7%) and Lille (+2.6%).

The number of property sales generally is also falling – down 17% over one year in the first half of 2022 according to estate agent network Orpi, marking a return to 2018 levels.

Read more: ‘Slowdown ahead’: Five French property trends from latest notaire data

Marc Touati, president of ACDEFI, an independent economic and financial consulting firm, writing in Capital, said he expects to see prices drop further over the coming year as households grapple with the cost of living crisis.

Eroded purchasing power, the tightening of credit conditions and the increased tax burden on homeowners will all negatively impact demand for property, he said.

It could also lead to forced property sales as some homeowners struggle to make ends meet, driving up supply.

Meanwhile, as télétravail (remote working) trends see redundant office spaces sold off and/or converted to housing, even more properties are expected to flood the market.

The death of baby boomers over the coming years is also predicted to bring a housing glut.

“In total, the decline in demand coupled with an increase in supply should result in a fall in French property prices of around 15% by the end of 2023, thereby reconnecting property values to wealth creation and income levels in France,” Mr Touati said.

France’s extra tax on empty homes: who has to pay this?

This week (December 20) saw the payment deadline for France’s tax on vacant dwellings (taxe sur les logements vacants, or TLV).

For those who did not wish to pay their TLV online, the deadline was five days earlier, on December 15.

TLV is only applicable in zones tendues – areas experiencing housing shortages – and where the property has been empty for a year or more, as of January 1 of the tax year.

It is only payable if you own a logement vacant à usage d’habitation. This is defined as a dwelling that could be habitable (ie, it has electricity, running water etc) but which is empty of furniture or with insufficient furniture to allow habitation.

Properties that are occupied for more than 90 consecutive days in the year, undergoing involuntary vacancy (the owner is looking for a tenant or a buyer), requiring major work to be habitable (more than 25% of the value of the dwelling) and furnished second homes subject to the taxe d'habitation are not liable to TLV.

Read more: Where is a local tax surcharge applied on second homes in France?

The rate of TLV is calculated on the basis of the rental value of the dwelling (the same as that used for the taxe d'habitation).

It varies according to the length of time the property has been vacant: 12.5% in the first year in which the property is taxable and 25% in subsequent years. However, these levels are due to rise in 2023, to 17% and 34% respectively.

Read more: France plans measure to increase taxes on many empty and second homes

Owners may contest the TLV if a demand for payment has been wrongly issued. You have a choice to pay the tax and then make a claim for the money back, or to contest it by requesting a deferment of payment, at the risk of having to pay an additional 10% surcharge if the claim is rejected.

The tax ceases to be due the year following that in which the property is re-occupied.

TLV should not be confused with the taxe d'habitation sur les logements vacants (THLV), which can only be applied in communes not located in zone tendues.

Owners cannot always blame building professionals when work damages a neighbour’s property

A property owner who tried to shift the entire blame for a landslip onto his project manager has been found liable for damages as well.

The incident occurred when the owner, who had employed a contractor to oversee work on his property, decided to extend the perimeter of the construction site to the boundary of his neighbour’s land to keep costs down.

Although his land was higher, the owner refused to build a wall to prevent earth movement down the slope, Le Figaro reports.

When the neighbour subsequently complained that the land was collapsing onto his plot, the owner, who has not been identified, insisted his project manager was entirely at fault for not opposing his idea.

Read more: French builders look to be able to revise quotes with rising prices

However, the Cour de cassation ruled on November 16 that because he had demanded the irregular work himself to save money, he was equally liable for the damage it caused to a third party.

As such, he must contribute his share towards the cost of repairs, the judges said.

Energy performance is top criteria among property hunters in France

An annual barometer of French people’s relationship with their housing has this year found energy performance to be a key concern.

Published on December 13, the survey, called ‘Les Français et leur logement’, found energy renovation is an important criterion for 94% of people who intend to buy a house to live in and for 86% of those who intend to rent one.

Among the most essential criteria in the choice of a future home, thermal insulation came top, up three points compared to last year (72% in 2022 against 68% in 2021).

Some 67% of French people believe the energy performance of their current home can be improved, with little difference between owners and tenants.

Four out of 10 homeowners say they have carried out energy renovation work in their property over the last two years and almost a third are thinking of doing so in the future, BFM reports.

In addition, some 59% of owners of properties classified E, F or G who have not decided to carry out renovation work say that government grants could help them to do so.

From January 1, 2023, people who own properties which consume over 450kWH per square metre per year, will no longer be able to rent them out.

This rule will extend to all G-rated properties – the lowest possible rating – from 2025, all F-rated properties from 2028 and all E-rated properties from 2034.

Read more: Home energy efficiency: Key dates for property owners in France

The survey was carried out in partnership by Procivis/Harris Interactive and the Jean Jaurès Foundation, who noted that a barrier to energy renovation for residents of shared apartment blocks (copropriétés) was reaching a consensus with other owners.

“The important decisions that need to be taken in order to achieve energy improvements in housing are difficult to make. This point led us to question the quality of relations in copropriétés and the perceived effectiveness of decision-making mechanisms.”

The government is currently preparing two reforms aimed at making it easier for residents of copropriétés to push through renovation projects.

At present, two thirds of co-owners must agree to work being carried out for the project to go ahead. FranceInfo recently reported that the Minister for Housing, Olivier Klein, is proposing to lower this to 50% of owners.

Read more: France looks to make eco-renovations easier for flat owners

French city makes private outdoor space compulsory in new apartments

All future apartments in Rennes must come with their own balcony, terrace or small garden as standard, after the city modified planning rules to take into account how property preferences have changed since the Covid lockdown periods.

The Breton capital said private outdoor space of at least 4m² will be obligatory for dwellings in buildings higher than two floors.

The measure was voted through by councillors last week (December 15) after a public consultation.

The city says it has a 10% tolerance for flats where this is not possible but in those cases developers will have to provide a communal outdoor space instead, with a minimum surface area of 6m² per total number of dwellings.

The rule also applies to student accommodation and retirement developments, although the minimum surface area for these is reduced to 3m². A communal space of at least 50m² will also be required.

Read more: MAP: See where apartment prices have risen the most in France

"Today, can we offer housing without outdoor space? I don't think so,” Laurence Besserve, vice-president of the municipal council, told Le Figaro.

“We are moving more and more towards collective housing with our ageing population. It is essential to be able to access one's balcony from one's flat.”

The measure will take effect in the coming months for all building permit applications in the city.

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