Councils should buy vacant houses compulsorily, Donohoe told

A major programme of compulsory purchasing of vacant properties by county councils should be undertaken with the assistance of the Government, a new report submitted to Minister for Finance Paschal Donohoe has said.

It says councils should use their existing powers to “urgently” issue compulsory purchase orders on vacant properties and then sell them on the open market.

The Government could assist local authorities by paying for the conveyancing and other costs incurred by the councils in such a process, the report from economic consultants Indecon says.

However, it recommends against the introduction of a vacant property tax “at this time” because it believes it would not be an “effective response to deal with the housing shortages”. It adds that the issue should be kept under review and that such a tax could be based on a revised property tax register. It should also only be levied in so-called rent pressure zones, where rent rises are limited to 4 per cent a year.

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But it finds that there is “limited scope” for such a tax, which “could also represent a distraction from the key policy challenge of addressing underlying supply”.

The report was commissioned during the budgetary process last year and was published after the weekly Cabinet meeting yesterday. A Government spokesman said its recommendations would inform Mr Donohoe’s deliberations as he drafts the October 9th budget.

Vacant homes

It cites Central Statistics Office data from 2016 which says 12.3 per cent of all homes are vacant, although this excludes holiday homes and those for sale or rent.

While recommending against a new tax at this point, the report says a “major” programme of compulsory purchase orders would send a signal to property owners sitting on vacant buildings.

The report defines a vacant property as one that has not been occupied for the previous 12 months.

“A major programme of compulsory purchase orders should be urgently activated on suitable residential vacant properties,” it says. “The local authority should then resell these properties on the open market.

“In order to incentivise local authorities to acquire vacant properties and resell them, consideration could be given to central government covering the conveyancing and other costs incurred by local authorities in the process of acquiring and reselling the properties.

“The signalling impact of this would serve to act as a disincentive to any property owner holding vacant properties.”

It adds that the level of vacant homes is likely to come down due to “market developments”.

A new register of vacant properties should also be created using property tax returns and data from the Residential Tenancies Board.

One option to speed up the sale of vacant homes is to introduce a time-limited lower rate of capital gains tax for such properties, the report adds.

In recommending against the introduction of a vacant property tax, Indecon cited a submission from the Housing Agency which said that “engagement” with property owners is the most effective way to bring homes back into use.

“In Indecon’s opinion,” the report adds, “the power to compulsory purchase properties from property owners who do not engage with the local authority should be actively used.”

Mr Donohoe said he would now examine the report and its recommendations and then make his views on the issue known.