Dirty tricks and allegations of sleaze returned to the French presidential campaign yesterday after a report that the centre-right candidate had accepted a hefty discount from the developer of a luxury riverside complex.

Nicolas Sarkozy dismissed as baseless claims that he was given a £200,000 discount on a property purchase in the richest Paris suburb when he was its mayor.

“Why do we have this illness, which is so French, in which we smear people just because they are a candidate in the presidential election?” asked Mr Sarkozy, who is running neck and neck with Ségolène Royal, the Socialist candidate, before the first round of voting, on April 22.

Even if Mr Sarkozy’s version is confirmed, his effort to cast himself as an outsider and man of the people will have been damaged by news that he made a profit of more than €1 million (£670,000) when he sold the duplex flat last November. Last weekend Mr Sarkozy, the Interior Minister and leader of the Union for a Popular Movement, depicted himself as a man of modest means. “I had an apartment and sold it. I am now renting. I have dreamt for a long time about buying a house for my family,” he said.

According to Le Canard Enchaîné, an investigative weekly, Mr Sarkozy and his wife, Cécilia, were given a discount of between 12 and 35 per cent off the market price for a large duplex flat and garden on the exclusive Île de la Jatte in 1997. The island in the Seine is in the western town of Neuilly-sur-Seine, the richest Paris suburb, where Mr Sarkozy was mayor from 1988 to 2002. He remains president of the affluent Hauts-de-Seine département, which includes Neuilly.

The building was part of a project that Mr Sarkozy had approved and it was developed by Lasserre, the biggest property and construction company operating in Neuilly. Lasserre also paid half the cost of internal changes required by the Sarkozys and the installation of an oak staircase and 48 metres (150ft) of wooden wall shelves and cabinets, Le Canard said, citing documents. The total benefit to the Sarkozys was at least €300,000, it added.

Denise Lasserre, the head of the development firm at the time, denied that any favours had been given to Mr Sarkozy.

Rejecting the report, Mr Sarkozy confirmed that he paid €876,000 for the 222sq m (2,400sq ft) property but insisted that this was the market price. He said that because he was conscious that he could have been the object of this type of attack he had at the time of purchase sought confirmation of the value from local tax officials. He had also paid for all the internal work, he added. The flat was sold last November for €1.95 million.

The Socialists demanded an explanation. “If everything in Le Canard is accurate, I would advise Mr Sarkozy to shed light very quickly on these extremely serious accusations,” said Arnaud Montebourg, an MP and lawyer, who is one of Ms Royal’s spokesmen.

Ms Royal, whose own property affairs are being investigated by Le Canard for publication next week, refused to comment on Mr Sarkozy’s case.

Her own image has suffered from media suggestions that she has undervalued for tax purposes a villa that she owns near the Riviera town of Cannes.

Yesterday Ms Royal said that “political leaders must be honest and show a good example”. The Green party wondered, “Is Mr Clean really that clean?” It urged Mr Sarkozy to produce evidence to clear himself. Scandals over housing and property transactions have dogged French politicians for the past two decades. President Chirac was elected in 1995 despite allegations that he and the family of Alain Juppé, his lieutenant and later Prime Minister, enjoyed heavy subsidies from city coffers for their private flats.

The hint of sleaze around Mr Sarkozy and doubts about Ms Royal’s tax reporting are feeding support for François Bayrou, the centrist candidate who has enjoyed a surge in opinion polls over the past month. The leader of the Union for French Democracy, a former school teacher and the son of a small farmer, is campaigning against the “big parties and big money” that he blames for France’s malaise. At 19 per cent of voting intentions for the first round, Mr Bayrou is less than seven points behind Ms Royal, according to a survey by the IFOP institute yesterday. Mr Sarkozy remains in the lead with 29 points, according to the poll.

Trouble at the door

French political housing scandals:

1981-95 President Mitterrand houses his mistress and illegitimate daughter in a secret, lavish state apartment in Quai Branly, in the centre of Paris

1993 Pierre Bérégovoy, the Socialist Prime Minister, admits that he received an interest-free housing loan from a businessman. Embarrassment over affair contributes to Mr Bérégovoy’s suicide after his election defeat in May 1993

1995 Jacques Chirac, the Mayor of Paris, and later the President, Alain Juppé, his deputy and later his Prime Minister, and Mr Juppé’s son are investigated over several luxury council-owned flats they rented at low cost. No charges were brought against them but the Juppés were forced to move

1995 Two sons of Jean Tibéri, Mr Chirac’s successor as Mayor of Paris, forced to leave council-subsidised flats after an official investigation

2005 Hervé Gaymard, the Finance Minister, is forced to resign after it is revealed that he was living in a state-paid flat rather than his official residence. The flat’s rent was €10,000 (£6,700) a month

Read Charles Bremner on the presidential race

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