A PLU is a document defining the rules for building and land use, including the property’s use (residential, retail, offices, public equipment, natural land, etc.), building materials and architecture, and authorization to repurpose a property.
Ambitious in terms of housing, the new PLU bioclimatic aims for 40% public housing, including 30% social housing by 2035.
In particular, the PLU bioclimatic implements a new mechanism, whereby some buildings with low housing capacity and with a surface area exceeding 5,000 square meters will have to devote 10% of their surface area to the creation of housing. Approximately 1,000 buildings (including office buildings) have already been identified in west of Paris as being covered by this new regulation (concentrated in in the 1st, 2nd, 8th, 9th, 16th and 17th districts). Even when selling the building, the purchaser is still subject to this clause and must dedicate a tenth of the floor plan to housing, whether or not renovation works are performed.
If owners of those buildings do not accept to create housing when refurbishing or selling such buildings, they benefit from a right of relinquishment (droit de délaissement), obliging the City to buy back the building at the market price, which does not take into account the reserves linked to the platting. If the City is unable to meet its buyback obligation, the owner will be released from his obligations to create housing.
The adoption of this mechanism would call for drastic changes, including increased due diligence and condition precedent in contractual documentation, in order for this newly established property class to be embraced by the current Paris market.
Long prior to the adoption of the PLU bioclimatic, negotiations took place between institutional owners and municipal authorities in relation to the buildings affected by this new regulation. Based on our research, a number of buildings that were initially recognized as being subject to this clause have since been denounced of any obligation to create housing.
Nevertheless, the final adoption of the PLU bioclimatic (that requires several additional steps and public studies) will face many pitfalls. In particular, the above-mentioned rule raises the following concerns:
- Is such a requirement compliant with property rights, as provided in Declaration of the Rights of Man and of the Citizen of 26 August 1789 and according to which “everyone has the right to enjoy, use, dispose of and transfer the property they have legally acquired”?
- Is the PLU (an administrative act without legal value) the right tool to limit property transfers?
Indeed, as French administrative courts have ruled, whilst the authors of a PLU are empowered to set "the general rules and easements for land use to achieve", this does not authorize them to "institute a limitation on the right of landowners to dispose of their property."
Many institutional owners affected by this constraint have announced that they would challenge the process and file both administrative and civil claims on the grounds of non-respect of property rights, loss of value.
More to come!
Client Alert 2023-145
