Alice-Mary Higgins (Independent) | Oireachtas source

I move recommendation No. 4:

In page 8, between lines 5 and 6, to insert the following: "Report on increase in rate of Vacant Homes Tax

7.The Minister shall, within three months of the passing of this Act, lay before both Houses of the Oireachtas a report on options to increase the rate of tax from 0.3 per cent of the value of a property to a rate of 5 per cent of the value of a property.".

I may have to leave shortly. If I do Senator Gavan will move the other recommendations in my name.

Recommendations Nos. 4 to 6, inclusive, relate to the vacant homes tax. Recommendation No. 4 calls for an increase in the rate of the vacant homes tax from 0.3% to 5%. This was the rate proposed in our Derelict and Vacant Sites Bill 2017. Back in 2017 the Civil Engagement Group and the then Green Party Senator Grace O'Sullivan had been calling for action in respect of vacant and derelict sites. We have all seen the pictures from around the country of vacant and derelict homes. The 0.3% rate set at present is too low to be a meaningful disincentive to property hoarding. It is an issue I raised on the Order of Business last week. I made the point that we need to look to the stick as well as the carrot. While I welcome the new grant schemes in respect of vacant homes the fact is that we have not applied pressure in the other way with regard to vacant homes. We have had very long delays. This is an issue that I and others have been raising since 2017. What significant difference could have been made to the housing crisis we have now if we had had real action in respect of vacant homes from 2017?

We are all aware that the annual price increase of a property in the current market vastly outstrips the rate of the tax. If anything, the tax in its current form is an incentive to retain a property. According to the CSO, property prices increased by 14% between June 2021 and 2022. Astronomic price increases continued for some time. The reality is that a 0.3% tax is not a meaningful incentive to bring a vacant property into use when the owner is gaining 10% or more of the value simply by hoarding the property, speculating on trading the property or having it as an asset on a portfolio that can be sold.

Recommendation No. 5 addresses a different gap in the policy on vacant homes. This is the fact that derelict properties are exempt from the tax. We know that in 2021 only €1.1 million out of the €4.5 million owed in derelict site levies was collected by city and county councils. This is a collection rate of 23%. This is an issue for the State and our finances. A total of 18 councils failed to collect any levy at all. Again there are questions on how we incentivise or press councils to do this. It is a matter for the Department of Finance to address.

If we have a derelict site levy that is not working, we need to ensure we have other measures that do work, as well as looking to see what pressure can be placed to ensure the levy is collected. Perhaps allowing the retention of the funds at local level or ring fencing could make a difference in this regard. In other countries such as France, where taxes on vacant and derelict homes have been successfully introduced, derelict buildings have been included in the same bracket as vacant homes. It is not clear why we have not taken this approach with regard to excluding them from any national revenue measures when clearly the site levies are not adequate and not being collected.

Recommendation No. 6 calls for a report on the options for applying a rate of vacant home tax that varies annually and may be linked to annual residential property price inflation data, with particular assessment of the revenue-raising potential of such a measure and the potential deterrent effects it may have in respect of property hoarding. Whenever vacant houses and homes are mentioned we hear the examples of homes that may be vacant because of the fair deal scheme. There are also homes that are vacant for various other reasons. We also know there are entire apartment buildings with many apartments owned by the same investors that are also empty. I live in the city centre of Dublin and I know there are properties and homes that are left vacant because they are part of a suite or portfolio of assets that are sold and traded on the basis of their potential future revenue. They are treated as devices to store money and as future potential asset returns rather than being used as places to live. This is another area where there may be scope to look to more nuanced measures such as a variable rate. Where we have multiple vacant homes or portfolios of vacant homes, we need to increase massively the pressure on them. More nuanced measures would be a more effective and fair way to deter property hoarding, ensuring that in a given year the level of the tax would be directly linked to property price inflation for that year. The CSO monitors property prices and collects such data already. These data could be used effectively in terms of exploring a variable rate of tax.