The Pied-à-Terre Tax Debate Returns. A Tale of Three Cities.

What Paris, Vancouver, and London tell us about the proposal now moving through Albany.

The Roebling Report  ·  Issue No. 135  ·  April 29, 2026  ·  Corey Cohen

On April 15, Governor Kathy Hochul and Mayor Zohran Mamdani endorsed the pied-à-terre tax: a recurring surcharge on luxury second homes valued above $5 million — a version of a proposal first introduced by then-State Senator Brad Hoylman-Sigal more than a decade ago and pronounced dead and revived across several budget cycles since. State analysts estimate roughly 13,000 units would qualify, generating something near $500 million annually. The rate schedule is still being negotiated; earlier versions of the bill scaled from under 1% on the bottom tier to 4% on properties above $25 million, and the current draft is expected to mirror that shape.

What is new is the coalition carrying it: a governor facing a widening state budget gap and a mayor whose platform frames Manhattan ultra-luxury as underutilized civic infrastructure. Whether it survives the Albany calendar is uncertain. What is worth understanding now is what a tax of this shape actually does to a market — because three other cities have run the experiment. One case is clean, one is instructive, and one — the one most often cited — is messier than it looks.

The Paris Baseline

Paris is the most informative comparison not because it is the most dramatic but because it is less driven by a single tax shock and more by steady policy layering. The city applies a surcharge of up to 60% on the municipal portion of the council tax for second homes — a structure in force, with modifications, since the zones tendues framework expanded in 2017. For a well-located central apartment, the second-home carrying cost runs roughly 3,000 to 5,000 euros annually, with cumulative exposure over a typical hold in the tens of thousands.

What Paris did not see is the instructive part. No sharp contraction. No broad vacancy collapse. What it saw was absorption. The surcharge was priced into acquisition decisions rather than disqualifying them, and the pied-à-terre market continued to function — thinner at the margins, but intact.

The distinction between Paris and New York is one of magnitude, not direction. The Paris surcharge measures in the low thousands of euros annually. The New York proposal, at 4.0% of incremental value at the top tier, sits considerably heavier — a $50 million Manhattan apartment would face annual exposure on the order of $1 million on the portion above $25 million. That widens the range of plausible outcomes but does not flip the sign. Paris is the case most likely to rhyme with New York on the behavioral question, not the case most likely to rhyme on magnitude.

The Vancouver Reading

Vancouver offers the second-cleanest read. Its Empty Homes Tax, in force since 2017, is not a direct analog to the New York proposal — it is a flat annual charge on properties left unoccupied for more than six months, not a tiered surcharge on assessed value. But its target audience overlaps considerably: non-resident capital parked in high-end housing stock.

The behavioral signal is what matters. Declared vacant units in Vancouver have fallen to record lows under the program; total declared vacancies dropped below 1,000 in 2024 for the first time since the tax launched, and the citywide declared-vacancy rate under the program now sits at 0.49%. Empty inventory returned to the rental market or was sold. The tax produced the behavior it was designed to produce.

What the tax did not produce was affordability or a repricing event. A C.D. Howe Institute study found no measurable decline in average rents and no detectable impact on new construction volumes. Vancouver’s top-tier prices held. Owners converted to primary-residence claims, shifted to rental, or sold — and the market absorbed the inventory without compression. Behavior moved. Pricing did not.

That distinction matters. Proponents in New York have at times framed revenue and affordability as a single outcome. They are separate outcomes. Vancouver supports the first firmly. It does not support a top-tier price-compression story at all.

The London Case

London’s prime market has been reshaping around a stacked policy and macro environment — not a single tax shock. Layered tax changes (a 3% stamp-duty surcharge on second-home purchases in 2016; council-tax doubling authority and the abolition of the foreign-resident tax regime in April 2025) have landed alongside Brexit, sterling weakness, a higher rate environment, and shifting flows of global capital toward Dubai, Milan, and Monaco. Disentangling those drivers cleanly is not possible. The cumulative effect, however, is measurable. Prime central London sales prices have fallen more than 20% since 2015 — a decade-long arc averaging roughly 2% annually — and transactions in the £10–15 million segment, the closest structural analog to the New York proposal’s top tier, fell roughly 31% in 2025. Around 70% of £15 million-plus London homes sold in the first half of 2025 were listed by long-term foreign residents unwinding positions.

The price response is more measured than the volume shock implies. Prime central London prices fell about 5% in 2025; the £10 million-plus segment declined under 6%. The market thinned — owners who could wait, did. Foreign-buyer registrations with central London agents are at their lowest level since 2008. On a price basis, the decade-long trajectory has been single-digit annual erosions, not collapse.

London supplies the upper-bound data point. The most-taxed prime market in the West — layered with stamp duty, foreign-buyer surcharges, council-tax doubling, the abolition of its foreign-resident tax regime, Brexit, and a higher rate environment — has produced single-digit annual price declines, sharper transaction declines, and a measurable shift in where global capital chooses to land. That is the range a tax of this shape operates inside. New York is not carrying the same accumulated load.

What the Pied-à-Terre Tax Means for New York

Reading the three cases together, New York is closer to Paris in mechanism — but closer to London in magnitude. Three things follow.

First, liquidity will move before prices do. Vancouver showed that owners convert, shift to rental, or sell when carrying costs change. London showed transaction volumes in the £10–15 million segment fell 31% in 2025 while prices in that band fell under 6%. Expect Manhattan transaction volume in the $5 million-plus band to thin meaningfully — and to thin first. Deals dying matters more than prices falling, and it happens first.

Second, top-tier price compression will be real but bounded. A reasonable scenario range for Manhattan $25 million-plus repricing is single digits to low double digits — closer to single digits in a Paris-style absorption outcome, closer to low double digits if New York’s buyer cohort behaves more like London’s. That is a wide range by design. It is also well below the 30%-plus declines projected by some early alarmist modeling, and it is anchored in actual price action: London’s £10 million-plus segment fell under 6% in 2025, even after a decade of stacked tax pressure.

Third, revenue will likely underperform projections. The institutional pattern is overestimation of the base. The 2021 IBO already revised an earlier pied-à-terre revenue estimate sharply downward as it absorbed the same base-shrinkage dynamics Vancouver had been demonstrating in real time. Expect $500 million to come in low. The magnitude is directional rather than precisely forecastable.

Markets price policy risk before policy is enacted, and that process has likely already begun. The window between policy risk being recognized and policy being enacted is historically where pricing errors are made — and where disciplined sellers outperform. Buyers in the $5–15 million band are already adjusting offers as if the legislation will pass. For the top tier, the question is whether the buyer cohort at $25 million-plus continues to clear at 2022–2024 pace or resets toward a new normal.

This legislation has not yet passed. The Albany calendar has several cycles to run, and earlier iterations of the same bill have died at later stages. But the international evidence is clear enough now to act on: a tax of this shape produces sharp behavioral change, modest top-tier price compression, and revenue below projection. Paris, Vancouver, and London converge on that. New York will too. By the time Albany decides, the market will already have.

Best,

Corey Cohen

Principal | The Roebling Team at Compass

c.cohen@compass.com

646.939.7375