Seán Sherlock (Cork East, Labour)
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194. To ask the Minister for Finance if he will provide an update under Housing for All to collection of data on vacancy levels with a view to introducing a new vacant property tax to ensure empty properties are used. [7131/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Addressing vacancy and dereliction, and maximising the use of existing housing stock, is a priority objective of the Government. Housing for All outlines a suite of measures aimed at addressing vacancy in a coordinated, robust manner, and specifically includes an action for the Department of Finance to collect data on vacancy with a view to introducing a vacant property tax.

Provisions included in the Finance (Local Property Tax) (Amendment) Act 2021 enabled Revenue to collect certain information on vacant properties in the Local Property Tax return forms submitted by residential property owners in respect of the new LPT valuation period 2022-2025. This information included whether the properties were unoccupied at 1 November 2021, the reason why and whether the properties had been vacant for 12 months or more. Vacancy data on LPT returns has not been verified by Revenue and was collected for informational purposes only. A preliminary analysis of this data was published by Revenue on 6 July 2022, and is available at: www.revenue.ie/en/corporate/information-about-revenue/statistics/local-property-tax/lpt-stats-2022/index.aspx.

The preliminary analysis published by Revenue includes a breakdown of the various reasons provided for vacancy. It indicates that the most frequent reasons for properties reported as vacant, were “Undergoing Refurbishment” (22.2%), “Other” (21.7%) and “Holiday Home” (20.4%). Other reasons for vacancy were reported as a property being for sale or between lettings, subject to a probate application or other legal proceedings, or where the owner is in long-term care. The analysis also indicated that levels of vacancy among LPT liable properties are low across all counties and lie within a range that is considered to be in line with a normal functioning housing market.

Following this work, the Minister for Finance, Paschal Donohoe T.D. announced the introduction of a new vacant homes tax (VHT) on Budget Day last year. This new measure seeks to achieve an appropriate balance between incentivising owners of vacant homes to bring their properties back into use and not penalising home-owners for normal, temporary vacancy.

A property will be considered vacant for the purposes of the tax if it is in use as a dwelling for fewer than 30 days in a 12-month chargeable period. VHT will be charged at a rate equal to three times the property’s existing base local property tax (LPT) rate. VHT must be paid in addition to a property’s LPT.

The first chargeable period for VHT commenced on 1 November 2022, and owners of vacant properties will be required to file a return in November 2023. Payment of the tax will be due on 1 January 2024. The number of properties in scope and VHT payable will depend on the self-assessed returns submitted by property owners, the number of properties declared as liable and the number of property owners entitled to claim exemption from the tax.

The primary objective of the VHT is to increase the supply of homes for rent or purchase to meet demand rather than increasing tax revenues. As this is a new measure, it is important to see how the tax operates after coming into effect, then make an assessment as to whether it is working. My Department will monitor and review the tax as to its effectiveness in bringing more properties into use.