Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael) | Oireachtas source

Tackling vacancy is an urgent priority for the Government and every Member of the Houses. It is appropriate that every available lever is deployed to incentivise the use of existing housing stock throughout the country. This includes measures to deter vacancy, alongside supportive measures that Senators have mentioned, such as grants. For this reason, the Minister for Finance announced in the budget that the rate of the vacant homes tax will increase to five times the existing base local property tax 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 the vacant homes tax remains at three times the amount of local property tax payable in respect of the property.

We are discussing the recommendation of a report on various aspects of the tax, such as increasing the rate and the inclusion of derelict properties within its scope. As the vacant homes tax is still a relatively new measure, it is important to see how it 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. It is working only if it brings properties back into use. Ideally, the tax would be paid on fewer and fewer properties and the tax take would decrease. That would be a measure of success, unlike most taxes. We will monitor this as part of the ordinary policy monitoring process conducted by Department of Finance officials and Revenue in respect of all new tax measures. We will monitor the tax and, if appropriate, we will review the matters outlined.

In developing the tax it is important to ensure that it is easy to understand and efficient to administer. We want the tax to work and have the desired effect. This is why it was set at a multiple of the property’s base local property tax charge, as this system is already well understood. By increasing the rate of the tax in the Finance Bill, we hope the vacant homes tax will have the effect of penalising any property owner whose property remain vacant in the first and current chargeable period. It also sends an important signal that it is no longer socially acceptable to retain vacant properties and they must be brought into use.

The tax will play an important role in addressing vacancy but we have to make sure we are also providing incentives, with the objective of encouraging the use of available housing.It is important to recognise, as Senator Cummins did, that grants of up to €70,000 are available to make derelict properties into habitable homes. It is essential those grants are availed of and used. As Senator Dolan pointed out, it can be difficult to absorb the up-front cost of doing up a house and there is a timing question on the application of these grants, which is, as yet, unresolved. As I stated in this House before, I have discussed the matter with the credit union movement. Some credit unions offer bridging finance for people to be able to meet the needs at an earlier stage in recognition that the State will definitely repay its part of the loan. There is flexibility to be achieved as more and more credit unions take up that option. However, it is a decision for individual credit unions and not something I can mandate. However, it is interesting to see how effective it can be when an individual manager takes such a decision. We have seen similar proactive actions being rewarded in Senator Cummins's county of Waterford in respect of the repair and lease scheme which has gone exceptionally well. We saw something similar in Louth in the past, where there were exceptionally good outcomes in the compulsory purchase order, CPO, process. Such initiatives, driven by individuals or groups, can be incredibly effective, which raises questions about why vacancy persists in some local authority areas when others have had extremely good results from targeted use of the available measures.

Specifically, regarding derelict properties, the tax seeks to target properties which are habitable and ready to be occupied quickly. Vacant homes tax applies to properties that are residential properties for the purposes of local property tax, which means properties are suitable as a dwelling. In this way, the tax targets properties which could be put to greater use with immediate effect.

The issue of dereliction is related. Senators will be aware that the Derelict Sites Act falls under the responsibility of my colleague, the Minister for Housing, Local Government and Heritage. I understand that his Department continues to liaise with local authorities on the implementation of the Derelict Sites Act 1990 with a view to improving its effectiveness. I understand a report on that will be forthcoming very soon.

At this point, the vacant homes tax is one part of a broader suite of measures. The Minister for Housing, Local Government and Heritage launched a vacant homes action plan in January of this year. This document outlines the progress made in addressing vacancy, along with the actions that being pursued to return as many vacant and derelict properties to use as possible, as quickly as possible. It is important to point out that the incentives provided, such as the vacant properties refurbishment grant and the ready to build scheme under the Croí Cónaithe towns fund, are important. The vacant properties refurbishment grant has been successful with 5,500 applications received to date, of which 2,800 have been approved. There has been some success to date, but there is long way to go with that. The Government recently agreed to raise the target and to have 4,000 homes refurbished by 2025. Again, I underline the opportunity to use CPOs.

I will take the opportunity to clarify some figures I quoted to Senator Black in respect of the bank levy earlier. I was given a note which gave me three figures, which I will correct. The yield reported for the bank levy in 2020 was €150 million. In 2021, it was €150 million and in 2022, it was €87 million. I will write to the Senator directly on that point with a full outline. I apologise for the error in my note.