Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank both Senators for their contributions and I assure them that tackling vacancy is a priority for this Government. It is appropriate that every available lever is deployed to incentivise the use of existing housing stock across the country. This includes measures to deter vacancy alongside supportive measures such as grants.

For this reason, I announced in the budget that the rate of the vacant homes tax will increase to five times the property’s existing local property tax, LPT, rate. The increase will apply to the chargeable period that commenced on 1 November 2023 and all future chargeable periods. For the chargeable period just ended on 31 October 2023, the rate of tax remains at three times the amount of the LPT payable in respect of the property.

A number of Senators have made recommendations for reports on various aspects of the tax. As this tax is still a relatively new measure, it is important to see how the tax operates after coming into effect, including the most recent change in the rate of this tax, and then make an assessment as to how it is working. This will occur as part of the ordinary policy monitoring process conducted by my officials and by Revenue in respect of all new tax measures. My Department will monitor the tax and I will keep the issues raised under review.

In developing the tax, it was important to ensure that the tax is easy to understand and efficient to administer. This is why the rate of the tax was set at a multiple of a property’s base LPT charge, as the LPT system is well understood. A vacancy tax charged using a different methodology such as a percentage of a property’s market value would require property owners to self-assess the market value of their property precisely. This would add cost and complexity and, considering the relatively small number of properties expected to be in scope for this tax, it is not considered efficient or the best use of resources to add further complexity to the system. While this tax will play an important role in addressing vacancy, care must be taken to get the balance right between achieving the objective of encouraging the use of available housing, without excessively penalising a limited group of property owners.

Regarding derelict properties, the tax seeks to target properties that are habitable and ready to be occupied quickly. Accordingly, the vacant homes tax is applied to properties that are residential properties for the purposes of LPT, that is, properties that are suitable for use as a dwelling. In this way, the tax targets properties that could be put to greater use with immediate effect. The issue of dereliction is related for sure but it is a separate matter. Senators will be aware that the Derelict Sites Act 1990 falls under the responsibility of my colleague the Minister for housing. I understand that his Department continues to liaise with local authorities on the implementation of the Derelict Sites Act with a view to improving its effectiveness. I understand that a report is about to be concluded on that issue because the numbers raised by the Senator are quite low.

We can also point to the various grants that are now in place and launched under the vacant homes action plan. We have the vacant property refurbishment grant and the ready to build scheme under the Croí Cónaithe towns fund. We have received 5,500 applications to date, of which nearly 2,800 have been approved.The Government recently decided to raise the target for homes refurbished to 4,000 by 2025.

In terms of evaluating the tax's impact, the legislation provides for a register of vacant homes to be established and maintained by the Revenue Commissioners. It will contain a list of vacant properties and their associated chargeable persons. The collection of data on vacant homes and the maintenance of this data on the register will allow changes in the number of vacant properties to be monitored. It will contribute to a better understanding of the number of vacant residential properties, the location of those properties and the reasons they are vacant. We recently received a first set of returns. My officials, the Revenue Commissioners and I are considering the content of that data set.

I am satisfied that the matters raised by the Senators will be sufficiently considered through appropriate channels in due course once further information and data are available in respect of the tax. I have demonstrated in this budget a willingness to revisit the issue of the vacant homes tax. I can assure the House that this willingness will continue, based on the evidence I see once we consider the data we are receiving.