THE GOVERNMENT HAS said that taxing holiday homes would not increase housing supply.
The claim comes at the same time the Government is looking to crack down on short-term letting platforms, such as Airbnb, in an effort to boost the state’s housing stock and help deal with the housing crisis.
Figures from the census found there were over 66,000 holiday homes in Ireland in 2022, up 6% compared to 2016.
The Government has recently pledged a crackdown on short term lets, as it estimates up to 30,000 properties are being rented out on sites such as Airbnb and Booking.com.
It has pledged to introduce a measure requiring homes which are advertised on such sites to be legally registered in an effort to bring 12,000 of these homes back into long-term accommodation.
There is likely to be some overlap between the number of holiday homes in the state and properties advertised on short-term letting sites.
However, despite the fact that there are significantly more holiday homes than Airbnb-style properties which are often vacant during the year, the government has been at pains not to target these homes in a similar fashion.
In the last budget the government introduced a vacant homes tax, however Paschal Donohoe said the measure was specifically not aimed at holiday homes.
To avoid the new charge, which has been set at 0.3% of the value of a home, a property need only be occupied for 30 days in the year, a requirement which most holiday homes would meet.
Dr Sarah Hamill, a professor at Trinity College Dublin, said this could be due to a cultural difference in how holiday homes and Airbnbs are perceived.
“I haven’t dug deep into the issue to be sure, but both need to be looked at,” she told The Journal.
Because we’re more used to holiday homes, people may not consider them a problem. Whereas short term lets are a more recent phenomenon, so we see them as an issue.
Would not help
In a statement to The Journal, the Department of Finance said taxing holiday homes would not help deal with the housing crisis.
“Imposing a charge specifically on holiday homes would not support the tax’s policy rationale of increasing housing supply,” it said.
“Such properties are not the intended target of Vacant Homes Tax, as they are not considered to be available for sale or rent.
The purpose of the tax is not to raise revenue or penalise owning additional properties, but to incentivise bringing available unoccupied properties back into use.
However, Dr Hamill said other jurisdictions have looked at taxing holiday homes in an effort to boost housing supply.
“[Ireland’s] vacant homes tax is generous towards owners. In lots of other jurisdictions they have to be occupied longer than in Ireland to qualify as not being vacant,” she said.
In Vancouver a property is classed as vacant if it is unoccupied for over six months per year and it does seem to be working somewhat. It has been credited with increasing supply in Vancouver, even though housing there is still very unaffordable.
Cian O’Callaghan, the Social Democrats housing spokesman, said in some areas holiday homes were as much of an issue as short-term lets.
“In some areas near entire estates are being bought out for holiday homes. It could be bought by people on higher incomes in urban areas, and local people are not able to compete with the prices,” he said.
Short term lets in tourist areas can be a much better use of housing stock than a holiday home that may just be used for a few weeks in a year, rather than the whole (tourist) season.
O’Callaghan said local authorities should be given flexibility around the vacant home tax.
He said councils should have the power to change the definition of what is a ‘vacant home’, such as a property in the area being occupied for 60 days per year instead of 30 to avoid the charge.
“You could give local authorities the power to do that [widen the vacant homes tax], as they would know that too many homes in an area are being used as holiday homes,” he said.
But you have areas where high levels of tourism are important, so the local authority should have the power of variance and you wouldn’t kill off holiday homes in an area where there isn’t a shortage of housing.
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