The real estate crisis will cause Paris City Hall to lose around 300 million euros in 2023

When buying real estate, the buyer pays transfer taxes, part of which goes into the pockets of municipalities. But with the drop in sales, the departments are getting much less than before. Especially in Paris.

The victims of the real estate crisis are increasing and the damage seems to be much greater than expected. We now know more about the shortage for local authorities, as Le Figaro explains. Between rising property rates, insufficiently flexible loan terms and slowly falling prices, households have struggled to afford property. However, at signing, the buyer pays “notary fees” or more precisely transfer fees (basically taxes) which are 7% of the sale price. Departments generally receive 4.5%. Departments have therefore seen this financial gain melt like snow in the sun in recent months.

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According to a document from the General Inspectorate for the Environment and Sustainable Development (IGEDD), which Le Figaro had access to, only one department had an increase in income over the course of a year at the end of September. This is Pyrénées-Orientales (+11.2%). On the other side of the spectrum, departments have seen revenue collapse. For example, Essonne lost 29.2% of transfer tax revenue, Corrèze 25.8%, Alpes-de-Haute-Provence 24.8% and Saône-et-Loire 30.1%, …

Three times more than expected

Paris, which is both a city and a department, collected almost a billion euros in transfer taxes over the past twelve months. This represents a decrease of 20.4% at the end of September. Le Figaro, which had these figures confirmed by Michel Klopfer, a specialist in local finance, explains that this already represents a shortfall of 200 million euros between January and September.

And for the entire year 2023, Le Figaro expects a total decrease of 300 million euros. Three times more than Paris City Hall expected. And this could have direct consequences for Parisians. It will indeed be necessary to replenish the coffers, and even if Anne Hidalgo vows not to, it could mean another property tax increase.

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