Brian Hayes (Dublin South West, Fine Gael) | Oireachtas source

I thank the Senator for raising this important this matter and highlighting an issue that is of concern not only in her area but in my area because of the proliferation and number of housing units where a management company is already in place.

The introduction of a property tax is part of a broader approach to the taxation of property which aims to replace some of the revenue raised from transaction based taxes, which have proven to be an unstable source of Government revenue, with an annual recurring property tax, which international experience has shown to be a more stable source of funding. The local property tax was designed on the principles of equity, transparency and simplicity. Under the local property tax, a liability applies to all owners of residential property with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept to a minimum for those liable persons who do not qualify for an exemption.

There is no specific relief from the local property tax for the payment of management fees, and there are no plans to introduce such a relief. Issues such as ability to pay are addressed through a system of deferrals, subject to meeting the qualifying conditions. Those who are liable for management fees to property management companies may be exempt or eligible for relief from the local property tax for another reason, or may be entitled to avail of a deferral arrangement under the provisions contained in the legislation.

Generally, properties in managed estates, to which such fees apply, would have been purchased by their owners in the knowledge that they would be taking on commitments to partake in and to fund the management of the estate, and that it was the intention that many such estates would not be taken in charge by local authorities, nor would it be appropriate for local authorities to do so. Management fees in these estates may, in some instances, include services such as refuse collection, maintenance of common areas and a sinking fund for certain repairs to the buildings. These are costs which homeowners in many other developments would have to fund themselves for their own properties.

In certain circumstances private estates will be taken in charge by local authorities in accordance with the relevant section of the Planning and Development Act 2000. This is a matter for the Minister for the Environment, Community and Local Government and the relevant local authorities. For those in unfinished estates, the Finance (Local Property Tax) Act 2012, as amended, provides that a residential property shall be exempt from the local property tax where it is situated in an unfinished housing estate that is specified in a list prescribed by the Minister for the Environment, Community and Local Government for the purposes of the Act.

The Minister for the Environment, Community and Local Government has prescribed and published this list, which is set out in the Schedule to the Finance (Local Property Tax) Regulations 2013 and was compiled by local authorities utilising the categorisation employed for the purposes of the national housing survey 2012.

For purposes of preparing the final list of developments to which the exemption from the local property tax would apply, local authorities were asked by the Department of the Environment, Community and Local Government to confirm or update the then existing list as appropriate. The local property tax is a self-assessment tax based on the market value of the property. In the first instance it will be a matter for the liable person to calculate the tax due. Liability to management fees and the scale of the fees due would be one of the factors that a property owner would take into account in valuing the property.

The introduction of the local property tax provides an opportunity for political reform at local government level. The local property tax will provide a stable funding base for local authorities and it can be altered into the future. This is a good reform in local democracy for the first time whereby funds will be ring-fenced for local authorities. We have not had that since the abolition of rates in 1977. Revenue from the local property tax will accrue to local authorities and will support the provision of local services.

Local authorities provide a broad range of services in the public realm the proper functioning of which are important for the wellbeing of every community and household. These include fire and emergency services, road maintenance and cleaning, street lighting, spatial and development planning etc. The net issue is that the local property tax applies to everybody no matter where one lives. Irrespective of the position in which some people find themselves in owning property in managed estates it is not envisaged that there would be a special category or a special exemption for them. That is not the position of the Government.