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?

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SoundMoney45's picture

Creating currency at unprecedented rates with negative interest rates.  Who could have possibly forseen a worldwide vacant housing epidemic?

J. Peasemold Gruntfuttock's picture

If I want to leave my property vacant that's MY choice.

If I am a single occupant in a 4 bedroom home that's MY choice.

If I have a single dwelling on a block of land that's MY choice.

Just try to introduce a socialist tax and see how that works out for you.

As it will apply to the rich and the poor, large and small, I can't wait to see the mansions surrendered to illegal immigrants.

Spare us please from danger and bleeding hearts.

Especially when charity doesn't just begin at home, you will lose your home to charity.

Now about that car of yours that can carry three passengers...

 

J. Peasemold Gruntfuttock

Zoomorph's picture

If I want to break in and steal your property that's MY choice.

Better pay your taxes so the government protects you!

J. Peasemold Gruntfuttock's picture

Your choice Zoo.

But MY pure lead applied liberally and with extreme prejudice to your miserable thieving carcass is all the protection I need.

 

J. Peasemold Gruntfuttock

quesnay's picture

If the house is empty, not sure how you are going to protect your house with 'lead'. Automated guns?

J. Peasemold Gruntfuttock's picture

The house or land may be vacant but that doesn't mean it's not protected.

And should you have an 'accident' while attempting theft, vandalism or occupancy, well you might have a long wait to dwell on your options.

Do you prefer your plumbum straight up or swiss cheese style?

 

J. Peasemold Gruntfuttock

quesnay's picture

Plumbum? Swiss Cheese style? Not familiar with that vernacular.

I wasn't advocating theft or vandalism btw. I am strongly for law and order. I was just poking fun at the kind of macho "come at me bro" on the internet that gets a bit old. Realistically, empty houses will become targets. In Paris they claimed that 40,000 don't even have electricity. Which means they don't even have alarms. You can pay someone to go around and look in on it once and awhile, but in general empty houses with no security seem like they are asking for trouble i.e. squatters.

Zoomorph's picture

Without your government goons you wouldn't last long, so you'd better pay those taxes. ;-)

J. Peasemold Gruntfuttock's picture

I do worry about you Zoo.

What on earth gave you the idea that government with or without 'goons' is about protecting your right to self determination and protection?

A goverment is as a government does, and so much of that in practice degenerates into self enrichment, pride, lust for power and control.

Your government can enforce the law of the land as delegated by the people but to paraphrase T. Jefferson it is up to you, as a last resort, to bear arms and protect yourself against tyranny.

If you have faith in government then I hope that works out well, and may the 'goons' be with you.

I put my faith in serving and protecting my family, my community and my country, and for that I willingly pay my dues.

And that is a life well lived and well worth living for.

Taxes be damned.

 

J. Peasemold Gruntfuttock

 

 

Zoomorph's picture

Of course the government isn't your friend, but if you latch on to them (and their "system") for your success, then you shouldn't expect any sympathy when they turn against you.

Got The Wrong No's picture

They already pay a tax. 60% is outright theft. So much for an individual's property rights. Fuck these bastards. 

slightlyskeptical's picture

Not good for a community to have a large % of vacancies. Need people living there to spend money in the community. A higher property tax is proper on these folks to keep their ownership from hurting the community as a whole.

Zoomorph's picture

Hoarding a piece of property that you don't use is "outright theft" from the perspective of people who can't afford inflated housing prices.

unsafe-space-time's picture

Rent is too high for a low income to afford. Historically food and clothes were more expensive and rent was cheaper. Housing is overvalued for some reason. Reason being money is not backed by anything.

quesnay's picture

"Just try to introduce a socialist tax and see how that works out for you."

Well, that's what they just did ...

I agree with you though. If you own it then it should be up to you if you want to leave it empty or not. But France is socialist and they just introduced a socialist tax. So "challenge accepted".

J. Peasemold Gruntfuttock's picture

I don't domicile or have property in France for good reason.

The French are a lost people and taxing is just a way of accelerating their demise.

But in these parts we haven't yet been overrun by the hordes or plagued by prolific breeders.

And I do what I can to protect a decent way of life and prevent the intrusion of do-gooders, bleeding hearts, political correctees and parasites of all types.

I owe it to my parents, our children and the country to stand up to theft of our legacy by tax or otherwise.

 

J. Peasemold Gruntfuttock

TeethVillage88s's picture

USSA gets all it's Traditions from Western Europe it seems.

- Military Tradition
- Taxing Tradition
- usury Tradition
- Banking Tradition
- Central Banking
- Industrial revolution
- Magna Carta, Roman Laws, Latin used in Law, Common Law
- Fraud, Racketeering, Sedition, Treason, Bribery
- Financial laws
- Lobbying Laws

** I don't really see a European Country that is a good model for the USA
*** We have gotten our problems from Europeans and their Meddling in our Independence.

Zoomorph's picture

Just look it at this way... you have an excess of what you need and there are other people who don't have what they need. Why would they not try everything in their power to take it from you? They would have to be very dumb not to if they could. You would have to brainwash them into believing you're a God or something. That or you can settle for keeping them away with violence. Your greed is far from free, and if you don't realize that then you're daddy's (or government's) spoiled brat who will find out sooner or later!

Akhenaten II's picture

Housing is a completely different asset class from gold or silver.  Housing is a human right. It is also an asset that is subsidised by the public purse.  Infrastructure, power, water, sewage, streets, security, state control of land release, planning restrictions, land taxes, construction approvals; all of these go into making a house liveable and creating the conditions for its creation and continuance.  Ergo; owners of these assets have a civil duty to use them for their intended purpose, a dwelling and not as a piggy bank.

If you want to own as many homes as you can afford then it should be perfectly legal to go develop greenfield housing in new areas where supply is not restricted and using it as a piggy bank does not affect local markets.   A city where firemen cannot afford to rent/live is a city that will eventually burn down.

waspwench's picture

"Housing is a human right." I don't think so. Life liberty and the pursuit of loot maybe, but no-one is obligated to provide you with a house.

TeethVillage88s's picture

I don't understand all of this.

- In Doctor Zivago, the Bolsheviks and the Communist party took over the big houses to put in the people/migrants
- In Britain, the Govt placed a Window Tax on large houses... probably since they starved the people or spend the Treasury on War of some kind
- USSA (Union of Soviet Socialist America) will go one of a few ways it seems (Fascism, Socialism/Communism, Globalism, World Govt, Slavery, Sever Population reduction (Disease, Starvation, War, Tax, No Energy, Economic Collapse))

buzzsaw99's picture

they will send On-Ree the local Peeping Tom around to see if you bitchez are home or not.

Fuck you, pay me. [/Goodfellas]

shovelhead's picture

ISIS is buying up the Muslim ghettos in Paris as a future investment in the coming Caliphate.

TeethVillage88s's picture

And TBTF are laundering the money for it!

ipso_facto's picture

Money from around the world is trying to establish (profitable) 'landing retreats' for foreign investors who need an escape hatch from the coming tidal wave of chaos.  As screwed up as the West has become it is still a far more stable option than anywhere else.

Able Ape's picture

Tax toilet paper because the world is FULL of shit....

the6thBook's picture

Never understood this.  The city is always filled with empty stores and empty buildings.  Isn't someone loosing money on this?  I mean they have to pay property tax right? 

To Hell In A Handbasket's picture

This is the by-product of QE money, which was only accessible to the top 5% is where a lot of that money went. Into housing. Me, you and our respective families, many of us on average wages live with the consequences of Central Bank greed, mismanagement and such destructive policies, who pick up the pieces when things go Tits Up.

rf80412's picture

They would rather leave the property vacant than have to mark to market.  Mortgage lenders and holders of securities can't afford to eat those losses.  It'd be 2008 all over again.

toady's picture

Mark to market would cause huge losses, but losses on property taxes and theft/damage due to vacancy and poor maintenance, plus these taxes on top of all that are not insignificant. 

I've never been able to prove it, but I believe the bank owned properties that aren't on the market must have a tax exemption deal.....

venturen's picture

say you could borrow money in a shell company at .25% or 0% and could buy property that your main company could never lose money on....how much property would you buy?

TeethVillage88s's picture

I say it is different in different towns.

In my town, you have to hook up to utilities, and have a phone number for contact... probably pay for waste collection and recycling too.

In 2009-2010 I think banks limited the number of foreclosures and delayed them. That way the mortgagee gets the bad credit for property taxes, and back bills. I say they controlled the housing market and kept supply of houses fairly small considering what was happening. News that I heard didn't seem to make a big deal out of empty houses after 2010.

But I may be uninformed. Keep the housing supply low, and prices return toward 2007 levels. Good strategy. Also advertise in foreign countries that we give away houses in Detroit and have luxury houses as investments. Maybe VISAs for Property Owners which is not unusual at all. Good Strategy. Good Ad Placement is all you need. Travel Brochures too.

I know a local guy was bringing an old house to code over 6 months. The way i heard it he put in a lot of work on the inside or outside... but didn't pay utilities. So the City condemned the house again.

wow thats crazy's picture

Iin 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%

Rent out the apartment or get taxed. Looks like a job for someone to manage rental properties!

Akhenaten II's picture

If it is owned by Chinese they will never rent it out.  They would prefer to pay the tax than rent it out. It's a cultural thing. They will have to go to 150%-200% to make it work.

directaction's picture

The Russians are buying homes in all big Western cities and intentionally leaving them vacant to drive the cities into utter ruin. 

scraping_by's picture

Commies under the bed! Except there's no furniture. Well, important people are certain there's beds, even if the home is empty.

MD's picture

It's the Chinese. I'm shocked the US hasn't done anything about them yet.

To Hell In A Handbasket's picture

I'm 100% behind this idea.

I Write Code's picture

I blame AirBnB

That many in Los Angeles?  I wonder.  Maybe people squating in their own houses?

CJgipper's picture

They're not even connected to utilitites.  It's clearly international money moving out of China and other controlled places.

Got The Wrong No's picture

Every big city has ghettos with empty houses. 

all-priced-in's picture

Government solutions always come with unintended consequences. In this case it appears that empty homes was the unintended consequence of free money.

scraping_by's picture

Maybe government interventions can't look after more than one group at a time. Unlimited free money for the financial companies keeps middle class families out of there home. No way to look after both.

arby63's picture

If speculators end up ruining the rental market and the overall quality of life in the cities then I suppose they are left with little choice but to institute a punitive tax until things change. I wonder if some of these folks will even notice the tax.

DisorderlyConduct's picture

If the speculators ruin the market, then their payback is a loss of value on their property investment.

That is, unless the property is just a currency used to move capital out of a repressive country. Then the dynamics change, no? The whole bubble is really a large body of fleeing capital moving from market to market. Seattle. Vancouver. New York. Toronto. Maybe restrictions on foriegn-owned property makes more sense. But socialists can't expropriate what isn't within reach...