Eoghan Murphy (Dublin South East, Fine Gael) | Oireachtas source

I thank the Minister of State, Deputy Simon Harris, for being available to take this topic.

The proposal I am putting forward is related to the new Central Bank decision on mortgage rules. Clarity is welcome, although I am not sure why it took the bank so long to deliberate or why it went through the process at all. However, it is good that we now know what its proposals are. Of course, I am not entirely happy with the outcome, but perhaps I am not meant to be. It is incredibly unfair on people who are looking to move into their second home which may be their first family home. They are going to be penalised. While they may have thought that they had saved enough to buy a home, the figure has now doubled. The tiering is welcome in terms of the clear distinction between first-time buyers and those who are buying to let. Using the percentages to address it is a smart move, but the value at which people in Dublin will step from 10% to 20% in the loan-to-value ratio is too low. Nevertheless, we have a decision and must work with it. That is why I am putting the following proposal to the Minister of State.

The Central Bank has made its decision on loan-to-value ratios and it is up to us now to act on the supply side. If we do not, people who are renting in Dublin will find themselves as collateral damage in the moves by the Central Bank and the property market. We must see how we can help to free up supply. I appreciate that the Government is working on a number of strategies in relation to building and investment. Dublin City Council will begin this year the next phase of the Dublin city development plan in which it will be able to look at densities, height ratios and transport infrastructure. They will all play a part in increasing the supply of housing. We as legislators and those in the Department, where the skills set is, can also think of ways to use the taxation system to incentivise people to move home by changing their attitudes to the properties in which they live.

There is a great deal of underoccupied housing stock in Dublin. This issue is being considered in the United Kingdom where it is estimated that 47% of homes in England and Wales are underoccupied. We have a problem with underoccupation in Ireland also. The question is what we can do about it. One measure we could pursue is one that is being promoted by the Mayor of London, Mr. Boris Johnson. It is the introduction of a capital gains tax exemption or reduction for people over a certain age - perhaps 65 years - who downsize their properties. It has the potential to free up family homes, of which there is a shortage at suitable prices in Dublin. We have known about this problem for quite some time. Where one finds a lack of supply of suitable accommodation at the right price and an underoccuption of dwellings, this proposal has the potential to have a very positive impact.

In Dublin there is a great deal of potential housing stock that is not being used appropriately. I hear the same anecdotally about other towns. When one walks through the city and looks above the ground floors of buildings with a retail purpose, one sees boxes against windows. People are using for storage or other purposes accommodation which could be used much more appropriately for housing. This all builds into the idea of a cultural change in how we think about renting versus owning and about where we live and why we live there. I note that this is not for everyone and that it is not about forcing people to do anything. It is a way to incentivise a change of behaviour and attitude.

I will set out the benefits. If the seller is over 65 years, having raised his or her children who are living in their own homes, and wants to downsize, a capital gains tax exemption or reduction would have the potential to permit him or her to keep a further one third of the sale price. It would be a huge incentive to sell, as well as constituting extra protection for someone in his or her old age in addition to his or her pension. There would be a benefit for the housing stock where it was an underoccupied home. A person might be selling a four or five bedroom house near local schools and transport which would then be freed up for a family or other users to come in and use it in the best possible way.

It would also have a positive impact on rents and prices in the area, given that it would increase supply.

A further benefit would be that the resulting increase in demand for apartment spaces would motivate us to examine how we are using the buildings in the city centre and urban villages that are not being used properly above the ground floor. This is how the benefit would have a wider impact on how we view property across society. While it might have to be paired with other incentives, such as redevelopment incentives for such properties, this simple tax incentive alone, without having to build anything new, could be a very efficient way of freeing up housing stock for families who need it and ensuring those who want to move are not penalised for doing so because our CGT tax of one third is so excessive.

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