New vacant property tax must be introduced ‘as soon as possible’ and ‘must be punitive’, says government

The Irish government has told Sky News it wants to introduce a tax on vacant properties “as soon as possible”.

The country has one of the highest vacancy rates in the developed world, even as demand for housing far outstrips supply, creating a homeless generation.

Housing Minister Darragh O’Brien said the long-promised tax to incentivize the use of vacant properties will be introduced “I expect, this year”.

“Once the data is collated, and this is something that myself and the finance minister are working on…it will be as soon as possible,” he added.

According to the GeoDirectory database, there were over 112,000 vacant or abandoned homes in Ireland in the last quarter of 2021.

However, there is no consensus on the precise number.

Data from the last Irish census, in 2016, put the figure at 183,000.

This is also the figure obtained by the website Money.co.uk in a study last year, which gave a vacancy rate of 9.10% of the total housing stock – the 10th highest in the world. England occupied the 20th position on the list.

Co Mayo, in the west of Ireland, is particularly affected.

According to GeoDirectory, the county has the highest number of derelict properties in Ireland and the second highest rate of vacant properties (derelict being defined as the need for structural work before a building can be reoccupied).

We visited a town in County Mayo that is a perfect microcosm of the vacancy problem in Ireland.

Ballinrobe’s population is just 2,800, but according to the North and West Regional Assembly, the town has 199 vacant or derelict buildings, or one empty building for every 14 residents.

To make matters worse, there is not a single property currently available to rent in Ballinrobe.

Imelda Murphy, a native of the city, has lived in the US state of Illinois for 20 years.

She wants to go home, to be close to her elderly parents, who still live in Ballinrobe. But she can’t find anywhere to rent in or near the city.

“It’s very frustrating,” she said. “I’m constantly on hold with real estate agents, and there’s zero for Mayo, absolutely zero.

“I don’t understand, I don’t know if the government is doing enough to help. I don’t know what to think.”

Ms Murphy stood outside her childhood home in the town’s Cornmarket, which is now, ironically, one of almost 200 vacant properties.

“I was born and raised in this house,” she said. “It wasn’t the house as it is now, it was more like Ballinrobe’s house. When I grew up here it was such a fabulous house.”

‘My mum and dad worked so hard in the garden, there was a fountain and lawn chairs,’ Ms Murphy added as she gazed at the overgrown grass and brambles.

Across the street, a row of four terraced houses that have been abandoned for 15 years have just been sold by local estate agent Property Partners Emma Gill.

Associate director Claire Glynn says the company also manages 150 rental properties, but none are currently available.

‘Unfortunately there are no properties on the market in Ballinrobe to let by the minute,’ she said. “None. We have huge demand. Every day the phone rings and people are looking for rentals, and unfortunately there is no supply.”

Along with new grants of up to €30,000 (£25,000) for people buying derelict property, the Irish government has pledged to finally introduce a vacant property tax, penalizing landlords who allow properties to remain vacant for an extended period.

Minister O’Brien told Sky News: “We wanted to collate the data through my colleagues in the Department of Finance, so that we know why houses are vacant.

“So if somebody’s in long-term care, I don’t want to tax them because their house isn’t being used.

“But there are a lot of other homes, new and existing, that aren’t being used, and we’re going to introduce a vacant property tax this year. It’s part of the stick approach, with the carrot, which is the grant.

“I completely get the frustration,” the minister said. “I myself am frustrated as housing minister about this. But we are going to do something about it.”

Sinn Fein is the largest opposition party in Ireland.

His housing spokesman, Eoin Ó Broin, responded by saying “what is really frustrating for the rest of us is that the government’s goals to tackle abandonment are anemic”.

“This tax has been in the pipeline for a long time,” he said. “My main concern is that it won’t be announced until October this year, for a levy next year, but it’s not clear if the payment will take place the following year. So you might have a delay 12 to 24 months before it is actually taken.

The government won’t say how punitive the new tax will be, but it’s understood it could be based on local property tax (LPT) returns.

If someone has left their property vacant for an extended period, they could be facing a 300-400% increase in their LPT.

At a time of high property price inflation, Mr Ó Broin said the new tax should be “punitive” to incentivize landlords to get their vacant properties back into use.

“Leaving properties vacant during a housing crisis is like hoarding food during a famine,” he said.

Some analysts doubt that a new vacant property tax is a silver bullet to Ireland’s vacancy problem, let alone the country’s wider housing problem.

But it will play well politically, and similar taxes have been proven to increase supply in the rental market in cities in other countries.

For now, a country that simply doesn’t have enough homes to meet demand will continue to bristle with tens of thousands of empty, vacant and unused homes.

Penny D. Jackson