Will the new vacant housing tax really change the fate of the homeless?

On the day of the recent Budget, there was so much media emphasis on the energy crisis – and special measures being brought in to tackle the crippling price increases for electricity and oil – that some people totally missed out on the news that yet another tax was being introduced by the Government to try and deal with the extraordinary number of vacant houses that are simply lying idle around the country.

Everybody knows that the housing crisis is the number one national issue after energy bills at the moment, but very few seem to have heard the news on Budget day that a new vacant homes tax is now on the way. This is a measure aimed at increasing the supply of residential properties around the country – and especially at a time when there are thousands of people on the waiting list for a home or living in temporary emergency accommodation.

The new regulation is relatively straightforward: the tax will apply to any residential properties which are occupied for less than 30 days in a 12-month period.  But it remains to be seen how many homes and owners it will affect, as even the Department of Finance estimates the new tax will raise just a measly €3 million to €4 million a year.

Burning issue

On the week of the Budget, I was asked to chair a discussion at the ploughing championships about this burning issues of empty houses around the country. I got an opportunity not only to get some proper up to date statistics about the situation as it stands around the country, but also to talk to some of the main players with a view to trying to find out what can be done about the situation.

In the first instance, it is important to point out and indeed emphasise that we are not talking about derelict houses here in this measure, or about houses that are just abandoned for years or have been only half-built.

Instead, we are looking at good quality houses with roofs and windows on them and in perfect living condition that, for any of a variety of reasons, are just lying idle. The whole objective of this new tax is to try and create more housing stock by encouraging people to put all these properties that are sitting vacant for most of the year into good use all year around by incentivising these property owners to either rent or sell these homes and make them contribute in some way to addressing the housing crisis. It’s really about maximising the use of existing housing stock. The new tax will be self-assessed and administered by the Revenue Commissioners.

When I read the brief given to me about the tax, I was intrigued firstly to find out just how many empty ‘good’ houses we have around the country and how the Revenue Commissioners will know which property is vacant and which is not. Apparently it all goes back to the census that was done earlier this year. It seems that even though they might not have noted down the owners of these homes, the census enumerator certainly did do a count on vacant houses – paying close attention to giveaway signs such as uncollected post in the letter box and (for example) gates simply left locked for days.

Census count

On the night of Census 2022 in April, these enumerators found that there were 166,752 vacant dwellings and 66,135 unoccupied holiday homes in the 26 counties – a staggering 35,000 of these in Dublin, where they are needed most. It’s an incredible number of empty beds when one thinks of the scale of the housing shortage in our country.

As a result of this finding, Housing Minister Darragh O’Brien – himself under renewed pressure to do something about the national housing crisis – had already made it clear the week before the Budget that there was most certainly going to be a new and punitive measure brought in to tackle all these empty homes. When it landed on Budget day, we all learned the tax would be charged at a rate that is three times the local property tax already applying to each home. That means in effect that if you own a second home valued at €300,000 that is occupied for less than 30 days a year, you would have to pay the annual €315 local property tax on it, with an additional tax of €945 a year on top of that, or three times the annual tax you would normally be paying on this property. All of this would mean in effect that your new annual bill for that property would now go up to €1,260 a year (for both the new tax and the old one).

At our discussion on the new tax at the ploughing, some people suggested to me that it would not be easy to work out for sure and certain whether a house was really vacant or was actually not legally available to be rented. For instance, in the case of the death of a person when the house of the deceased would normally remain empty for months, it could well be justifiably claimed that sorting out the probate matters and the will could take well over a year or two years in some cases before the new ownership could be sorted out and the house actually rented or sold by a new owner. However, the Minister and his Department say that even though the tax is aimed at long-term vacant properties that are unoccupied for 12 months or more, there are a number of exemptions.

Minister O’Brien is adamant that exemptions will apply to ensure owners are not unfairly charged where the property may be vacant for a genuine reason. It seems to me that a letter from a solicitor handling a probate would probably suffice to explain quite a few cases. Tax will not be applied either to properties that are recently sold or listed for sale or rent, properties that are vacant due to its occupier’s illness or long-term care, or to properties that are vacant due to significant refurbishment work. Therefore it seems to me that these exemptions would also probably take several thousand more houses and owners out of the new tax net.

Holiday homes

Another question raised at the public debate I chaired was the thorny issue of holiday homes lying idle around the country in places like Rosses Point, Kilkee and Ballybunion. Thousands of these buildings are unused quite a lot and it seems now that at least some of them might actually be eligible for the extra tax – depending on how often they are occupied/used.

For instance, anyone just using their holiday home for only a few weeks every summer would be in trouble (i.e. eligible to pay the tax) as it could be claimed that house could in fact be rented to a needy or homeless family for the rest of the year, but because it is more than likely that the vast majority of holiday homes are occupied for at least five or six months of the year, I can’t see how too many more of these seaside properties will actually fall into the tax net.

The reaction to the new measure has been a quiet one. There’s been a fairly muted response about the actual merits of the new scheme from those in the ‘housing for the homeless’ sector, with few of the main players getting too excited about the new tax. Pat Doyle, chief executive of the Peter McVerry Trust, was quoted last week as saying the new tax had “the potential to increase the availability of all forms of housing” but it’s clear that the actual regulation of the new tax and its enforcement probably holds the key to whether or not it will actually make a difference.

We will have to wait and see if it actually frees up these vacant homes or the holiday ones on our coasts – and that may well take a year or more to clearly determine.