Frances Black (Independent) | Oireachtas source

Recommendation No. 5 calls for a report on options for changes to the vacant homes tax, including options to increase the rate of tax to ten times the basic rate of local property tax and the potential for the inclusion of derelict properties within the criteria for taxable properties. It is welcome that the vacant homes tax is being increased from three times the basic rate of local property tax to five times. This is clearly in recognition of the fact that the current rate, which amounts to about 0.3% of the value of the property, is simply not a deterrent to property hoarding. For the past decade, it has not been uncommon to see double-digit house-price inflation in a given year. According to the CSO, property prices increased by 14% from June 2021 to June 2022. Such high levels of inflation mean that if you leave a property vacant, you can easily make an annual gain of more than 10% of its value, while having to pay back only 0.3%. This is an incentive for property hoarding, not a deterrent. The slower house-price growth this year has been an outlier, so we cannot simply assume we will continue to see it in coming years. While I appreciate that the Minister has increased the tax, this increase is still not likely to be sufficient. Our amendment requests an exploration of a vacant homes tax set at ten times the basic rate of the local property tax, which would amount to around 1% of the value of the property. This would create a more significant deterrent to property hoarding. This is, after all, the stated purpose of the tax.

Moving on to the issue of derelict properties, our group made similar arguments last year. However, we will repeat them as the issue has not gone away. That the vacant homes tax leaves out derelict properties entirely has been an oversight since the beginning. When former Civil Engagement Group Senator Grace O’Sullivan first introduced legislation to address this issue, back in 2017, her Bill, the Derelict and Vacant Sites Bill rightly treated both vacant and derelict sites as connected parts of the same problem. This is what experts have repeatedly called for since. Therefore, to decouple the issues is short-sighted.

Currently, the measure supposedly addressing dereliction is the derelict sites levy, administered by councils. To say it has been a failure is an absolute understatement. In 2021, for example, only €1.1 million out of the €4.5 million owed in derelict site levies was actually collected by city and county councils. This was a collection rate of 23%.Eighteen councils failed to collect any levy at all, so we know the derelict site levy is not working. What is going to be done to address dereliction?

In other countries, such as France, where vacant home taxes have been successfully introduced, derelict buildings have not been excluded or treated separately. It is essential that we treat dereliction and vacancy similarly. This is why our amendment calls for a report on the potential to include derelict sites within the scope of the vacant homes tax.

On the occupancy rules, the threshold of only 30 days annual occupancy for a property to be considered exempt from the proposed vacant property tax is extremely low in comparison to international norms. When the tax was introduced, Dr. Gerard Turley, an economist at the University of Galway, writing for RTÉ, said:

In other countries and cities around the world that have introduced a vacant property tax, the usual cut-off period is six months. In the Irish case it is one month, which is a very low bar or threshold to meet.

It is clear that the average holiday home will not be subject to this tax, because all an owner has to do is spend a few weeks there, or let friends or family stay there for a few weeks in the summer, and leave it empty for the rest of the year. This is sufficient to dodge the tax. This is surely not in the spirit of the tax, which is to bring vacant properties into use to address the devastating housing crisis that is having such a negative effect on the lives of so many.