The French President, François Hollande has announced capital gains tax relief for home sales from 2014 onwards. He is to cut the period of ownership required for tax exempt sales of building land and second homes from the current 30 years to 22 years.

The previous government in 2012 doubled the tax exempt ownership period but the French building federation president Didier Ridoret has said this led to a marked slowdown in property transactions. Hollande, who has focused on boosting homebuilding, and in particular within the lower income bracket, announced new measures that will feature in the 2014 budget. In a recent news conference he said “I’m not looking to give a present to property owners but rather to enable owners who want to sell and others who want to buy to do so, and to bring prices down”.

Hollande also announced a cut in value added tax for institutional investors buying intermediate housing to 10% from 19.6%, pointing to a real demand in this segment between social housing and private rented property but with insufficient supply. Ridoret added that the measure could lead an additional 30,000-40,000 homes being built annually.

Hollande said planned decrees aimed at removing other obstacles to house building could take effect shortly. The decrees, that bypass the French National Assembly parliament, include a series of changes to planning law that can be implemented fairly easily and with an immediate impact on construction. These include a relaxation of density limits, moves to facilitate office-residential conversions, and a reduction in VAT on social housing. More complex measures requiring a longer parliamentary debate will be included in a broader housing bill to be presented to parliament in the 2013 summer.