The latest city to crack down on pied-a-terres, Paris hits empty apartments with a whopping 60 percent tax
While Vancouver has gotten tons of attention with its 15 percent tax on foreign buyers, as global housing prices skyrocket and precious apartments in coveted cities sit empty, more and more local governments are taking similar measures to discourage pied-a-terre investors. The latest headline-grabbing move: Paris has enacted an eye-popping 60 percent increase on property taxes for absentee homeowners, as Mansion Global reported in late January.
Previously, owners of second homes in the French capital had already been paying an additional 20 percent tax on top of the usual property taxes, but nevertheless, the Telegraph reports that non-resident homes in Paris rose by 43 percent over the past 15 years, while owner-occupied homes rose by only three percent in that same period. Non-resident owned homes now account for around 10 percent of the city's apartments, amidst a chronic housing shortage that mirrors problems facing cities across the globe. (H/T to Better Dwelling for alerting us to the story.)
But while it sounds dramatic at first blush, some experts seem to think that even such a steep increase won't have much of a dampening effect, since the new, increased tax would only mean an extra 1,500 euros or so per year. "It isn't going to have a desired effect because if your second home is worth around €3 million and you have to pay an extra €1,000 a year in tax, you’re not going to be that bothered,” Knight Frank's Mark Harvey told Mansion Global. “This is just hot air.”
Critics of the new rules also say they're unlikely to encourage owners of second homes in Paris to rent out their properties to tenants, since rental protections in the city are so strong (for instance, under certain rules, tenants can insist that a landlord continue to rent them a property for up to three years after the notice of termination).
That said, as more cities across the globe take these kinds of steps against out-of-control investment (Toronto is reportedly mulling cooling measures, too), New York officials seem more conspicuously silent on the matter. As we've written previously, an outright tax on foreign buyers would violate federal fair housing laws, and politicians don't seem especially keen on extra taxes that could target un-used homes.
But perhaps if Paris starts to see some success, New Yorkers will put on some pressure on the city's elected officials to follow suit?
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