Vacant Homes Are A Global Epidemic (And Paris Is Fighting It With A 60% Tax)

Tyler Durden's picture

Via Stephen Punwasi of BetterDwelling.com,

Runaway real estate speculation has been filling global capitals with vacant homes, creating artificial shortages in the world’s most sought after cities. The “shortage” has made local home owners wealthy overnight, but it comes at the cost of turning lively cities into empty shells. The city of Paris has decided it’s had enough, and implemented a tax in 2015. They didn’t quite get the results they wanted, so they’re now tripling the tax to 60%.

Paris’ Empty Home Problem

Paris has been trying to deal with vacant property owners for some time. Despite warnings that the city will have to take action, the number of vacant homes is growing. There’s now 107,000 vacant homes, representing 7.5% of all residential dwellings in the city according to France’s INSEE. Deputy Mayor Ian Brossat told Le Monde that 40,000 of those vacant homes aren’t even connected to the electrical grid.

Local developers have argued that more new construction is the solution. However Brossat argues “In a city as dense as Paris, where it is very difficult to build, controlling the occupancy of housing is strategic.” It appears the city believes they have 107,000 reasons more construction is not the solution.

Vacant Home Count

Total number of vacant homes, as reported by local governments.

Paris’ Vacant Tax Increase

Paris implemented a tax recently, but it didn’t quite produce the desired outcome. Starting in 2015 the city elected to tax vacant homes the equivalent of 20% of the fair market value of rent. On January 30 this year, they decided to triple that amount to 60%. The idea isn’t to punish those fortunate enough to own a second (or twelfth) home. They’re trying to discourage speculation and promote a healthy rental market.

Vacancy As A Percentage

Percent of homes vacant as a percentage of total homes as counted by local governments.

Empty Homes Across The World

Paris’ 107,000 empty homes might seem like a lot, but it’s becoming strangely normal around the world. New York City had a whopping 318,831 vacant units in 2015. It’s a hot topic in Sydney, where 118,499 vacant units were counted in 2013. Heck, London considers it a critical issue, and they “only” have 22,000 empty homes. There’s a massive numbers of vacant homes across the globe, but only Paris has decided to take aggressive action to tackle it.

Growing populations have barely put a dent in the vacant homes in  global real estate capitals. The amount of speculation has been scaling with demand, which is a curious paradox. This signifies an issue that’s more complex than just a basic supply and demand problem.

Is the Paris’ tax going too far, or not enough?

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
froze25's picture

Just convert them to Rapeugee housing that will surely take care of valuation issues.

Looney's picture

 

so they’re now tripling the tax to 60%

And if the 60% tax ain’t working, they will keep tripling the tax every few years.  ;-)

Looney

My Little Pony's picture

Progressive Guinean presidential candidate Abou Berete chooses the Accredited Times to take his campaign worldwide. 

https://www.accredited-times.com/2017/03/07/accredited-times-endorses-ab...

A very sensible choice of news media to get his message heard - join him in the comments thread as he fights back against right-wing trolls.

SafelyGraze's picture

" 40,000 of those vacant homes aren’t even connected to the electrical grid"

preppers.

they're everywhere.

toady's picture

That's a negative. The houses not connected to the grid are usually bank owned. They cut all costs to nothing and let them rot into non-existence... all to prop up the value of the mortgages that are current... you didn't think the housing bubble was over, did you? In fact the whole article reads like the writer assumes these homes are owned by regular people. That's not true at all. 

Now, a house out in the country not connected to the grid.... yeah, that's a prepper !

techpriest's picture

Somehow I'm thinking a thorough audit and realistic accounting would put a stop to this.

Also, home would become affordable because people could afford them.

PT's picture

Remember when you thought that excessive supply resulted in the lowering of prices?  What was that phrase again? ... Price Discovery???  Man, that was a loooooooooong time ago.

Vacant homes are a Global Epidemic.  Second only to wage slaves and homeless people.  Gee, what to do?  What to do?  I have no idea.  Perhaps we'd better demolish them all so we can build new, more expensive ones to sell.

Starts are probably skewed.  Of course lots of homes are empty.  Doesn't take into account billionaires who own multiple dwellings.  They can't possibly live in them all at once!

Citxmech's picture

"...put a stop to this"

If I want to buy a hose and let it sit vacant, that's my f'n perogative.  WTF does the govt. get off trying to manipulate private property?

Oh, that's right, because I only "rent it" subject to Big Brother's grand designs.

 

Xena fobe's picture

You can do that in the country.  But you have neighbors in the city. Property hoarding and speculation destroys the economies of cities.  The residents of Paris have the right to sustain the liveability of their home town.  If you don't like it, sell or don't buy there. 

PT's picture

You're bringing your Capitalist knife to a Cronyist gunfight.
People like you are just the meat stuck in the sandwich.

True, but the game is bigger than that.  The real problem is when bankrupt people lose their homes, the bank repossesses the houses and leaves the houses empty instead of putting them on the market, purely so they can keep house prices artificially high.  Now no-one can afford to buy a house unless they guarantee themselves to go bankrupt in the process.  Except for some crony "investors" who manage to buy cheap houses through back-channels and make themselves rich.  For the most part, the net result is that people are having their land stolen from them.  They have no access to the back-channels that sell cheap houses and are forced to either do without or buy on the "open" market.  As I just said, it is NOT an "open" market.  Foreclosed homes are deliberately being held off-market in order to keep house prices high.  Banksters lend money to idiots who go bankrupt so banksters can repossess houses to keep off market to keep prices too high so they can lend to more idiots ...

And if the world worked as advertised then the banksters would go bankrupt from owning so many non-performing loans, but that has not been a problem for them since they invented the CDOs and other derivatives that allowed them to off load risk and it has been even less of a problem since they started getting bailed out and selling their bad debt to the govt.

Nobody For President's picture

Thank you!

I suspect that a high percentage of these vacancies are bank owned or owned by people in the club we ain't in, and tax be damned, it is trivial for them at almost any percent.

Offthebeach's picture

Everything must be done to levitate asset prices.  Removing inventory, supply, to manufacture a shortage to protect non free market valuation.   Naturally a shelter price would be great for young families.  Just as "junk" cars were great for working class, young people again.  Naturally we had Fed Reserve debt notes for clunkers.   

 

Basically, financially systems once long ago the footman, servant of a real, productive economy have become the economy.  Real people, real shelter, transportation, and other things are very very very secondary.  

Nick Jihad's picture

Not to disagree,  but if Paris is anything like my state, the legal burdens and risks of renting your property, also cause owners to leave them vacant.

 

Hobbleknee's picture

Comments like this are why I love zerohedge.  It's like knowledge treasure everywhere.

To Hell In A Handbasket's picture

You directly asked Abou Berete, to contact George Soros' https://www.opensocietyfoundations.org/contact-us and then said

"The foundation is run by well-known philanthropist George Soros, who has funded many of my political acquaintances and I’m sure would be delighted to finance your campaign"

OMG. Do you wish to help Abou Berete, or make him enter into a Faustian pact? I'm sure George "fucking" Soros' would love to help him, especially considering Guinea is blessed with natural resources including a shit ton of cobalt, palladium, and platinum. I bet Soros and his fellow Jews would love even more of that.

NoDebt's picture

Hey, if they were smart maybe they would look at any tourist destination locale and realize they have that same problem about 8 months of every year.

I could come up with SO MANY new taxes it's a genuine mystery why I'm not a Democrat in Congress right now.

 

toady's picture

Michigan figured it about a decade ago.... put a higher tax rate on "vacation homes" (a lot of michiganders winter in Florida) 

Totally pissed me off! 

Black-Man's picture

How is that pulled off? AFAIK... unless ur using the vacation home as some kind of tax write-off in your home state - they shouldn't even know about real estate in other states.

TeethVillage88s's picture

What about Michigan cabins?

- Cabin with no elec, no sewer, no water?
- Cabin with water, sewer, electric?

Nobody For President's picture

Maybe you still have a moral compass?

NoDebt's picture

You presume a lot from me.

 

Kprime's picture

We are in a Broken Moral Compass bubble.  We have an oversupply of BMCs.  Thus not everyone can get into .gov these days.  The financial district is overloaded and the overflow has gone into real estate. We are stashing millions of un-used BMCs trainees on college campuses.

Killdo's picture

and millenials I know here in San Francsico have no memory of better times (when any grad coudl buy a place in any big city in the world). I bought one in Kensington in London in mid 90s before I even graduated - with my security-officer job. 

Young people nowadays think it's quite normal that nobody can afford to buy anything.

So they focus even more on backstabbung each other and being jealous of their best friends....Dark Ages

Apocalicious's picture

The beatings will continue until morale improves.

NEOCON1's picture

They need to get ahead of the curve: 500% tax!!!

NEOCON1's picture

Thewy need to get ahead of the curve: 500% tax!!!

annalee's picture

The socialist is the Fed who gives out q.e. money to their cronies to buy homes and raise rent.  Who can afford to buy houses and not live in them?

junction's picture

Paris has other problems as well, like poachers.  I wonder if these rhino killers are "Syrian" border crossers from Africa.

PARIS (Reuters) - Poachers broke into a French zoo, shot dead a rare white rhinoceros and sawed off its horn in what is believed to be the first time in Europe that a rhino in captivity has been attacked and killed.

The four-year-old male white rhino called Vince was found dead in his enclosure by his keeper at the Thoiry zoo and wildlife park about 50 km (30 miles) west of Paris on Tuesday morning after an overnight break-in, the zoo said.

Police, who were investigating the crime, said the rhino had been shot three times in the head and one of its horns had been sawn off, probably with a chainsaw.

chubbar's picture

OK, who but some fucking retarded rapefugees from Africa would think that was a good idea? Fucking morons, you can't fix this level of stupidity, it'll be kinder to shoot them than anything else.

 

TeethVillage88s's picture

But France is demilitarized and 'gun-free'???

unsafe-space-time's picture

They need the aphrodisiacs to satisfy all the french ladies. There is so much demand.

doctor10's picture

"Empty Houses" =some collateral somewhere for a desperate banker looking to shore up a few hundred trillion in derivatives he's upside down on.

just sayin'

TheGardener's picture

Back in the ninties my cousin from down under took advantage from UK liberal squatter laws and occupied

a flat in London . He could had stayed with me for free too, but that anarchist appeal of ownership by occupation

really got him.

CheapBastard's picture

"No one saw this coming."

 

How about taxing RE purchases by foreigners. Then do as the Parisites do, high tax on empty properties. I see more rent control coming down the pike also. The people who made Big Money in RE as landlords are dumping from what I see in cities near me. Even commerical property...they are dumping as fast as they can.

BritBob's picture

There are currently 1.4 million empty homes in Spain, according to research by Alquiler Seguro, a company specialising in rental accommodation. This is a huge waste of resources, they point out. 

The study examined 12 provinces – including Madrid, Barcelona, Valencia, Malaga, Alicante, and Seville.

Barcelona and Madrid lead the provinces with the highest number of empty homes. Barcelona has a total of 283,155 empty properties, ahead of Madrid with 263,279, and Valencia with 214,022.

On the other hand, Barcelona and Madrid are the provinces with the tightest rental markets, where demand exceeds supply.

So why does Rajoy need Gibraltar?  

Rajoy - “This is the only such territory in Europe, and one that affects our own territorial integrity,” Mr Rajoy said, claiming that Britain had “ignored the mandate” of the UN General Assembly. (Daily Telegraph 26 Sept 2013)

 

Gibraltar - Some Relevant International Law: https://www.academia.edu/10575180/Gibraltar_-_Some_Relevant_Internationa...

 

 

Ah, just a Spanish fantasy, a political distraction. I see....

Son of Loki's picture

I wonder what the ghost invnetory is in the USA these days. With zero rates I suspect bankers are still holding alot of vacant houses off the market. My Dad tells me back in the 1980's the banks foreclosed and the RE crash was corrected ... as foreclosures occurred and house prices dropped to realisitc values, they were bought up by people who could affod them in line with their salaries. Plus, over 750 financial fraudsters were indicted back then.

 

This time zero bankers were indicted under Bush and Osama bin Bama.

Now it's completely different. Zero down loans, zero interest rates, and so on.

Houses Depreciate's picture

You can't hide 25 million empty houses.

InflammatoryResponse's picture

my buddy that does appraisals in FL. says there are LOTS of houses sitting around in the limbo category.

 

TheGardener's picture

I almost feel sorry for you britbloob creature of zero relevance in this highly esteemed comment  section.

You are all the BritBots the UK has ? Sorry mate, the Malvinas are as Argentinian as it gets , Gibraltar is a rock to fend off the Moores or else give it up .

 

 

Iconoclast's picture

Nicely done France, and in London those numbers are bogus, there's approx 50,000 empty new builds being used as safe despoil boxes in London; a place to park often laundered money, and laundering is a huge business through the city of London.

TheVillageIdiot's picture

Is there a source for that information I can read about? Interesting social reaction... especially in light of an increasing trend to eliminate cash in societies...

Killdo's picture

South Kensington is mostly owned by arabs I think  - and empty

Milton Keynes's picture

"If the cost of credit is effectively zero, then buying a home on credit is almost like a zero cost call on real estate futures,

tied to a zero cost put on real estate futures."...

 

if you can buy a $1Million dollar building in Manhattan, and hold it for $10K/year and it appreciates 6% , you made

$50K in balance sheet appreciation, in a year...  

 

This is Real Estate Bubble Economics.  

 

If you keep it vacant you can sell "Faster" then if it's occupied...

 

However, if it's occupied, it's harder to sell (Smaller Market) and 

it's (Income valuation) may not support the Market Price...

 

So, like a Tech Startup, it's worth more pre-revenue then it is with Revenue...

 

Thank you Greenspan, Bernanke and the Central Bankers...

 

 

TeethVillage88s's picture

That is a good way to explain the situation.

I heard you only keep a building in New York City for 10 years, since you can depreciate it for only 10 years. So the game is played a little different sometimes... maybe that applies in Rent Controlled Buildings (occupied).

hotrod's picture

Raise the gold price.

chosen's picture

Chinese money-laundering. 

Overleveraged_and_Impatient's picture

Hmmm, what if it's an empty property but it's being rented out for AIRBNB. Technically vacant, right? Would be shame to pay 60% for that