It is indeed completely illegal to own a property where illegal activities happen, know it and do nothing about it in France. Reporting the issue to the police is an adequate step. And yes, people have been jailed for owning apartments where terror plotting happened. Thank you for this good exemple.

For the good of the discussion, I would however appreciate if you kept your baseless fantasies about council housing - which is both numerous and very safe in France, a country which tries to do something to mitigate poverty - out of it.