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Wednesday 29 November 2023 Dublin: 2°C

Column Having the Revenue assess the value of your home is a totally unsuitable idea

There has been immense confusion over the valuation of homes for the property tax, which is why a site value tax would have been better, writes James Pike.

IT DOES NOT seem to be clear what method of assessment is going to be used for the property tax. Firstly we were told that there was to be self-assessment, but no set off for obtaining professional valuation. Now we are being told that Revenue will send their own assessments to owners. We have not been told on what basis they are making these assessments. Do they understand how complex and expensive it will be to arrive at the right value for each individual property?

Ronan Lyons has demonstrated how easy it is to make initial valuations. As he has said, government agencies, such as the Land Registry – who can tell you who owns what plot of land and what’s on the land – have not been consulted, and the same applies to the GeoDirectory, which is the database of addresses and their physical locations maintained by the Post Office and Ordnance Survey Ireland. The Property Price Register has none of the direct information needed.

While Ronan Lyon’s method is a good general base, it does not reflect the actual condition of the property and the full extent of improvements, extensions etc., which can have major impact on value. It will therefore be necessary to access every property to assess its actual value. A huge task which is also likely to encounter fierce opposition.

Site value tax

This is why Site Value Tax is so much easier to assess, as the value only changes with the impact of new infrastructure, and whole blocks of urban property or suburban estates will have the same land value which is then divided by the site area, whereas even an apparently identical row of houses can each have a different value.

Denmark has operated property taxes and site value tax for many years. They assess residential site values one year, and the rest the next, so that values are reasonably up to date. They also have regional appeal panels, who deal with appeals promptly. The whole system costs just 2.5 per cent of the revenue generated, once the system is put in place. If the tax was eventually used to cover all local government expenditure, this percentage would be much smaller.

One of the problems with the form of the new residential property tax is that it deters economic activity by its nature. Taxing the full value of a property penalises the homeowner who makes improvements to their house, for example, to make it more energy efficient or build an extension. Any home improvements cause much needed economic activity and, especially at this time, should be strongly encouraged.

The government is evidently aware of this problem with a full value tax, attempting to avoid it by not changing the amount of tax payable per property, regardless of improvements, until 2016. While it will likely lessen the tax’s adverse effect on the economy temporarily it does not fix the fundamental problem that, tax holiday or not, those who make improvements to their properties will be penalised for them when this period ends. Other endeavours have been made to try to avoid its detrimental effect; making previously unused houses purchased from developers and second-hand properties bought by first-time buyers exempt from the tax until the end of 2016.


However, these add-ons run counter to how it is justified. The justification behind the full value tax is that owners of more valuable residential property should pay more than owners than ones with less valuable ones. This is on the basis that the former are generally more wealthy than the latter and hence should pay more. However, the tax holiday and the exemptions above also go against its justification.

Some of the exemptions themselves are also distorted. For example, those who currently possess a residential property that is unoccupied have an incentive to keep it that way, rather than sell it on or let it out, as they will be exempted from the tax altogether. Empty or derelict properties are becoming a major problem in our towns and cities again.

Basing the property tax solely on site values is a much easier and effective way of doing what the government wishes to do. This would have encouraged economic growth and ameliorated many of the major problems caused by the property boom without the need to give unfair exemptions to different sections of society. Such a tax would have been in harmony with the government’s objectives as it is based on the principle that it recovers the cost of the amenities enjoyed by individuals but created by the community.

James Pike is an architect and founder director of O’Mahony Pike.  He has played a major role over more than 40 years in urban planning and housing in Ireland, but has also been involved in major educational, office, retail, hotel and industrial projects, and in projects in the UK and North Africa. He has played a continuing role in the Royal Institute of the Architects of Ireland (RIAI) since the 1960’s culminating in the presidency for 2006 – 2007. He is currently Chairman of the Irish Architecture Foundation and a founding member of the Urban Forum. He is also a member of a network involved in Smart Taxes, Feasta, and the campaign Irish Site Value Tax.

Read: Revenue to send homeowners estimate of property tax>

Column: Want to value your house for the property tax? Here’s a guide>

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