Taxing vacant housing based on potential rental income in France

Paris, France Land policy, Land value taxation


France has extensive experience[1] in developing and applying vacancy taxes, which encourage owners to reintroduce empty dwellings to the housing market in areas where there is unmet demand, in order to improve access, especially by low-income households. Introduced in 1998, the French vacant homes tax applied to all liveable housing that have been vacant for more than two years, but public housing was exempt in 680 larger urban areas. The tax related to the potential annual rent that the property could produce, initially at a rate of 10 per cent of the rental value during the first year when the tax was due (after two years of vacancy), increasing to 12.5 per cent for the second year (3-4 years vacant) and 15 per cent after four years of vacancy. The vacancy tax has since been substantially widened in application and its rate increased.

[1] The impact of the vacancy tax of France was recently examined (Mariona Segú, “The Impact of taxing vacancy on housing markets: Evidence from France”, Journal of Public Economics, vol. 185 (May 2020).


Taxes can be selectively applied to discourage undesirable land uses. These are also relevant for the conversion of empty dwellings to liveable homes.

“Empty houses” is an inefficient use of essential resources and can also have a negative impact on security, community, and economic activity in neighbourhoods. Some homes are empty most of the year because they are only used intermittently as holiday accommodation.[1] Other vacant homes fall into the hands of accidental landlords via inheritance or are accumulated by speculative investors.

Rising homelessness amidst vacancy rates is a common phenomenon in Europe[2] and North America.[3], [4] Activating and reusing vacant buildings could offer a solution to abandonment and intentional vacancy (this is commonly known as the “buy to leave” speculative market).

[1] Vacation homes and short-term letting can contribute to the economy but also cause housing access problems for locals living in tourist-reliant economies (

[2] For more information, see

[3] Alan Mallach, The Empty Housing Next Door, Policy Focus Report (Cambridge, MA, Lincoln Institute of Land Policy, 2018). Available

[4] Rental and ownership vacancy rates have hovered around 7 per cent in the United States.



Research on the application of the tax has found that it influenced the behaviour of owners of vacant units, who converted their dwellings for use as primary residences and reduced the vacancy rate by a substantial 13 per cent over four years, with stronger results in areas of higher vacancy.

The tax accounted for a 13 per cent decrease in vacancy rates between 1997 and 2001, especially among long-term vacant dwellings, and most vacant units were turned into primary residences.



More information

In 2013, the vacancy tax was substantially strengthened. The duration of tax-free vacancy was reduced to one year, and the tax rate began at 12.5 per cent of potential rent income and increased to 25 per cent in the years following the property being left vacant. The government also made the tax compulsory for local areas with more than 50,000 inhabitants.