Advertisement
Shutterstock/Cristi C
Housing Crisis

Urgent buy up of empty houses needed, but vacant property tax not recommended

A report presented to government said a tax would not be an effective response to deal with the housing shortages.

THE INTRODUCTION OF a vacant property tax is not recommended at this time, according to an independent report presented to government.

However, it said a major programme of compulsory purchase orders of vacant properties should be urgently activated. 

If the government decide to introduce the tax, it should be levied on properties in rent pressure zones which have been vacant for a period of 12 months or more and it should be imposed in the form of a surcharge on the existing Local Property Tax, recommends the report.

Indecon consultants were tasked by the Department of Finance to conduct an examination of introducing such a tax and the impact it might have in increasing the available housing stock on the market.

In theory, the report states that a vacant property tax “could re-activate significant segments of the existing housing stock” but it found that the reasons for vacancy are wide-ranging. 

Vacant properties 

The issue of vacant properties not in use around the country has hit the headlines in recent weeks, due to activists from the Take Back the City group being evicted from a building they had been occupying on North Frederick Street in Dublin last week. 

According to the review, the estimated vacancy rates in Dublin city in 2016 were over 8%.

“If vacancy rates of around 8% were representative of properties which would return to the market in the event of a vacant property tax, then the rationale for a tax would be very strong,” states the report. 

However, it adds the reasons for vacancies and whether significant numbers of properties would return to the market if a vacancy tax was introduced is difficult to determine.

Therefore it states that is does not recommend the introduction of a residential vacant property tax at this time as it does not believe it would be an effective response to deal with the housing shortages, adding: 

The available evidence suggests that there is limited scope for a vacant property tax to bring significant numbers of currently vacant properties back into the housing supply in the areas of the country in which demand for housing is most acute.
Indecon believes such a tax would represent a distraction from the critical policy challenge of addressing the underlying supply of new housing. 

Indecon however recommends this should be kept under review.

The report, which the government are not bound to adhere to, was noted by Cabinet today.

‘Careful consideration’ 

If government do decide to press ahead with such a tax in the future, the report states that “careful consideration” must be given to design the appropriate criteria for its implementation. 

It added that the level of the tax would need to be very high in order to have any impact on the incentives of the owners of vacant properties and exemptions should be granted for those properties which have a legitimate reason for vacancy.

The group said the exemptions should be aligned with existing exemptions that are already in place for the LPT and should also include exemptions for dwellings currently on the market for sale/rent or undergoing renovations, as well as for residents in nursing homes or hospitals.

In addition to recommending that the tax should not be introduced, the group did state that a major programme of compulsory purchase orders should be urgently activated on suitable residential vacant properties.

More data should be collected on vacant properties so as to monitor movements in the level of vacancies of residential properties and consideration should also be given to introducing a time limited differential rate of capital gains tax for long term vacant residential properties, found the report. 

Reacting to the report, the finance minister said he will now examine the report and its recommendations, in conjunction with relevant Departments and will make his views known then.

A government spokesperson said the report will be considered as part of the budgetary process this year. 

The possibility of a vacant property tax is separate to the introduction of a vacant site levy tax that is due to kick in next year. 

Your Voice
Readers Comments
52
This is YOUR comments community. Stay civil, stay constructive, stay on topic. Please familiarise yourself with our comments policy here before taking part.
Leave a Comment
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.

    Leave a commentcancel