Cian O'Callaghan (Dublin Bay North, Social Democrats)
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258. To ask the Minister for Finance the number of reports on residential vacancy that have been commissioned in the past three years; the titles of these reports; the level of vacancy that was reported by area, in tabular form; the recommendations that were made in these reports; and if he will make a statement on the matter. [62719/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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In 2018 I commissioned  Indecon consultants to examine the potential of a vacant residential property tax to meet the objective of increasing the supply of homes. The resulting report presented a detailed evidence-based assessment of vacancy rates in areas in which the demand for housing is most acute.

The Indecon report is entitled “Report on the Taxation of Vacant Residential Property” and is available on the Government website gov.ie. 

The report did not recommend the introduction of a residential vacant property tax as it considered it would not be an effective response to deal with the housing challenges. The very low vacancy rates in the areas of greatest demand for housing, particularly in terms of medium term vacancy, indicated that the potential for a vacant property tax to increase housing supply was very limited and could represent a distraction from the need to significantly accelerate the building of new social housing, affordable housing and the facilitation of private sector supply.

In summary, the recommendations in the report are as follows

1. Indecon did not recommend the introduction of a residential vacant property tax as they did not believe it would be an effective response to deal with the housing shortages. However, Indecon recommended this should be kept under review.

2. In the event that a vacant property tax is introduced at some stage in the future, careful consideration is required to design the appropriate criteria for the implementation of such a tax.

3. Properties which become vacant owing to the long-term illness of the owner and which subsequently are rented out should be exempt from Local Property Tax

4. Enhanced evidence should be collected to monitor movements in the level of vacancies of residential properties.

5. A major programme of compulsory purchase orders should be urgently activated on suitable residential vacant properties.

6. Consideration should be given to introducing a time limited differential rate of capital gains tax for long term vacant residential properties.

It is the stated intention of the Government to introduce a Vacant Property tax next year. The Government’s strategy ‘Housing For All’ includes an action for my Department to collect data on vacancy with a view to introducing a Vacant Property Tax. The timeframe for delivery on this commitment is the second quarter of 2022.  The Finance (Local Property Tax) (Amendment) Act 2021 has accordingly enabled Revenue to collect certain information on vacant properties in the Local Property Tax (LPT) return forms submitted by residential property owners last month in respect of the new LPT valuation period 2022-2025. This information, together with information from other available sources, will be used to inform the optimum design of a Vacant Property Tax.

Cian O'Callaghan (Dublin Bay North, Social Democrats)
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259. To ask the Minister for Finance the steps that have been taken towards the introduction of a tax on vacant residential property; the estimated amount of revenue that would be raised by such a tax at each possible rate, in tabular form; the impact on property usage each rate would have; and if he will make a statement on the matter. [62721/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government’s strategy ‘Housing For All’ includes an action for my Department to collect data on vacancy with a view to introducing a Vacant Property Tax. The timeframe for delivery on this commitment is the second quarter of 2022.  The Finance (Local Property Tax) (Amendment) Act 2021 has accordingly enabled Revenue to collect certain information on vacant properties in the Local Property Tax (LPT) return forms submitted by residential property owners last month in respect of the new LPT valuation period 2022-2025. This information, together with information from other available sources, will be used to assess the merits and design of a Vacant Property Tax.

Before introducing such a tax it is important to have a sound understanding of the quantity, locations and characteristics of long term vacant properties.  It is also essential to identify the reasons for vacancy, and whether this is long or short-term in nature. There may be genuine and acceptable reasons for vacancy such as refurbishment work, the temporary absence of the owner for medical reasons or pending the grant of probate for a deceased person’s estate. Appropriate exemptions from any charge will have to be considered in addition to acceptable periods of vacancy.

The LPT returns in respect of around 1.9 million dwellings are currently being analysed by Revenue and include information on the number and location of unoccupied properties, and the reasons for and duration of this, as of 1 November 2021. I look forward to receiving the results of Revenue’s analysis of this information early in 2022.  This analysis will be used together with other available sources of information to inform the optimum design of a Vacant Property Tax. The objective of the tax will be to increase the supply of housing to help address the housing challenge. It will not be primarily a revenue raising measure. In advance of the analysis of LPT returns and design of the tax it is not possible to provide estimates of the revenues the tax may generate.

In designing the tax it will be important to achieve an appropriate balance between placing sufficient pressure on vacant home owners to allow the measure to actually work as an incentive, and ensuring any such tax does not arbitrarily or excessively penalise home-owners in a discriminatory way.