Revaluation of property data used to set local taxes delayed in France but concerns continue
A reform of the valeurs locatives cadastrales, a theoretical annual rental value assigned to every property, has been planned for several years
A theoretical annual rental value assigned to every property has been set to be recalculated for many years
Karine Lazarus / Shutterstock
A major reform of local property tax has been postponed again but worries continue over this – especially for homeowners whose local councils have put up their rates in recent years.
The reform concerns the calculation of the valeurs locatives cadastrales (VLC), a theoretical annual rental value assigned to every property.
It is eight years since we first reported on trials into re-evaluating VLCs, meant to lead to nationwide changes from 2018. In 2021, a new deadline of 2026 was set, now moved to 2028.
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For many owners, it will mean higher bills for taxe foncière (TF) and waste collection as well as taxe d’habitation on second homes or tax on empty properties, although some will see reductions.
VLCs form the basis for the taxes, with local council percentage rates being the other element.
While VLCs are meant to relate to rental values, no proper revaluation has been carried out since 1970.
They rise each year nationally, based on the previous year’s inflation. Otherwise, they are only adjusted for a property when work is carried out, such as an extension or new pool.
This means that in many cases they bear no real relation to property values, and discrepancies exist – owners of some small new houses might pay more TF than some owners of grand old maisons de maître.
TF is also low in parts of some cities that have been gentrified.
Increases set to be phased in
A 2020 study by the IPP institute estimated that revision would see rises of up to 15% on average for properties built before 1950, reaching 20% for some built before 1920, and reductions of up to 16% on average for properties from the 1960s-70s.
In 2016, an official said the aim was not to set VLCs at market rates, but to ensure they reflect fairly the desirability of a property or area today.
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The latest plans include ‘coefficients’ meant to smooth out the difference between real market value and the old VLCs. The aim is to stop “an explosion” in tax bills, said Sylvain Grataloup, president of property owners’ group UNPI.
Those facing significant changes should also see them phased in over a number of years. “But even at this stage, there are no rules set out on how this will be applied,” Mr Grataloup said.
The new VLCs will be based on an assigned value per square metre, which will vary by geographic area and property type.
Current plans suggest only ‘exceptional homes’ will be assessed individually, which raises questions as existing VLCs take account of comfort and amenities.
From 2025, landlords will be asked to declare actual rents they receive, and this data will be used for the recalculations. In future, VLCs are meant to continue to evolve in line with rents.
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UNPI figures show that TF bills have risen 32.9% on average over the past 10 years.
