Taxe foncière rise limits?: Five updates for property owners in France

We also look at the rules on building shared fences and new rent controls in Bordeaux and Montpellier

We are covering new rent control measures in Bordeaux, dividing fences, mortgages and France’s taxe foncière rates
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Government considering limits on taxe foncière rates

The French government is considering placing limits on increases to taxe foncière rates as inflation is set to reach close to 7% later this year.

France’s property ownership tax is calculated based on inflation and other elements, including local rates. The amount is reviewed each year.

The government is now considering imposing a limit on any increases as part of a string of measures to counter rising living costs and soaring inflation, Le Figaro reported.

It comes after finance minister Bruno Le Maire earlier this week confirmed plans to cap rent price rises at 3.5% for a one-year period.

Read more: What will (likely) be included in France’s July spending power law

Around 30 million households pay the taxe foncière each year, with bills sent out in September and payment normally due in October.

Several French communes have already announced that the bills will rise by over 10% this year, unless there is government intervention.

Read more: Taxe foncière bills rising by over 10% in several French towns

Making neighbours pay for boundary walls or fences

Article 663 of France’s Civil Code states that you can essentially force your neighbour to agree to pay half the costs of a dividing wall or fence - but only if you live in a built-up area.

The code does not strictly define what an urban area is so if your case goes to court it will be up to the judges.

There are other conditions to making your neighbour share the costs of building a dividing wall or fence.

  • The plot of land has to have a house built on it. You cannot force your neighbour to agree to build a fence or a wall on empty land
  • If you have already built a wall or fence to divide your properties, you cannot force your neighbour to retroactively cover the costs. On the other hand, your neighbour can ask to share ownership of the wall or fence.

If you live in a built-up area and you want to build a wall or fence to create a division between your property and your neighbour’s, you can propose sharing the construction costs and ownership with your neighbour.

Your agreement can be made orally but it is best to have a written and signed agreement in case of any disputes.

If your neighbour refuses, you can take your case to court to get your neighbour to share the costs of the construction.

If it does go to court, article 663 will be strictly followed, meaning that if the judge rules in your favour they will order the construction of a solid wall, and not a fence or any other type of dividing construction.

If there are no other local regulations then the wall must be at least 3.2 metres high if you are in a town or city of over 50,000 people, or 2.6 metres high otherwise.

Record-high savings needed to buy a property

People wishing to buy a property by taking out a mortgage needed to have on average a record-high €55,519 in savings during the first half of 2022, real estate company Capital 21 has reported.

This amounts to 21% of the cost of an average property sold via Capital 21 (not including notaires’ fees). This amount is demanded by banks when deciding whether to grant mortgages to potential buyers.

It is a huge increase from the second half of 2021, when buyers needed on average €32,153 (13% of average property cost) or the first half of 2021 when buyers needed €24,872 (10% of average property cost).

In 2016 and 2017, buyers did not need to have personal savings to buy a property with a 20-year mortgage and repayments of €1,000 per month.

The increase in the amount buyers need to have in savings, called the apport personnel, is linked to increasing property prices in France.

Overall, properties in France were 7.3% more expensive in the first quarter of this year compared to the same period in 2021.

Read more: House prices, wind farms: Five updates for property owners in France

Read more: Latest notaire data: Where are property prices rising most in France?

Banque de France eases mortgage regulation rates

The Banque de France has announced that it will increase the taux d’usure from July 1 so that banks can grant people larger mortgages.

The taux d’usure is the maximum rate at which a loan can be granted. It is in place to regulate interest rates and to protect borrowers from taking loans or mortgages that could leave them in financial difficulty.

It is set each quarter by the Banque de France as a percentage.

When a potential buyer goes to a bank to ask for a mortgage, the bank will calculate the

annual percentage rate of charge (APR) of a loan, which includes the basic interest rate as well as loan insurance payments, premiums and other fees.

This APR cannot exceed the taux d’usure, which has fixed values set as percentages.

The Banque de France has now revealed that it will increase the rates from Friday, July 1.

The taux d’usure for 20-year mortgages will increase from 2.4% to 2.55% or in some cases 2.6%. For mortgages of 10 - 20 years, the rate will increase from 2.43% to 2.58% or in some cases 2.63%.

This increase will allow potential buyers the possibility to borrow more from banks.

This has been deemed vital owing to rising property costs and the complications people are facing in getting mortgages.

Bordeaux / Montpellier to bring in rent control measures

Bordeaux and Montpellier are set to become the next major cities in France to introduce a system of rent controls known as the encadrement des loyers.

Where it is in place, landlords cannot legally charge more than a fixed ceiling rental rate, which varies depending on the type and location of the property.

It already applies in Paris, Lille and Lyon.

The system will come in in Montpellier tomorrow (July 1) and on July 15 in Bordeaux.

Bordeaux mayor Pierre Hurmic said the reason for bringing it in was not to “wage a war against landlords, but against excesses, which is what we want to prevent”.

“The majority of landlords charge decent rents, this measure targets those who take advantage of the overly competitive rental market to make money.”

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