People buying holiday homes in this State for their own use look like being the only ones who will have to pay the Government's new 2 per cent property tax. The anti-speculation tax and a new 9 per cent flat rate of stamp duty is expected to lead to an immediate fall off in sales of holiday homes, according to estate agents. The new measures, which followed the publication of the third Bacon report, will also come as a serious setback for several country clubs planning developments of weekend homes. The clubs include Druids Glen, in Wicklow, which is building 18 apartments and seven houses in the first phase of a plan to increase the usage of local facilities. The K Club, in Co Kildare, is also due to develop 60 apartments and 35 houses in advance of hosting the Ryder Cup in 2005. In Carlow, Mount Wolseley Golf and Country Club, near Tullow, still has to find buyers for most of the 100 apartments and houses on the edge of the course. Mount Juliet, in Co Kilkenny, has been more fortunate in the timing of a marketing campaign for the latest phase of its golf villas. The club sold the vast majority of the 22 homes under construction before the publication of the latest Bacon report.
With many families now unlikely to buy holiday homes which would bring them into the tax net, the value of some of the houses will inevitably slip because of the difficulty of selling them. For the Government, the positive side of this scenario is that many of these houses will be bought as starter homes by local people rather than weekend retreats. Estate agent Charlie McCarthy, who specialises in holiday homes in west Cork, says the Government has cut the price of existing holiday homes "in one fell swoop". He said owners would only realise what has happened when they put these houses on the market. He described the 2 per cent levy as a "cowardly" tax on people who would not have a vote in the same constituency as their holiday homes.
Estate agents in the west of Ireland, the area most affected by the new measures, insist there cannot be any link between the holiday homes market in the west and the housing crisis in Dublin. There are indications that the property industry in the west may initiate a campaign against the 2 per cent levy.
Agent Matt O'Sullivan of Clifden, Co Galway, said there was a ground swell of resistance in the west to the 2 per cent property tax. The objectors were promising to create even more trouble than the fishermen in the rod licence dispute a few years ago. If the tax was not withdrawn, Irish people would buy homes abroad rather than in the west. Galway estate agent Danno Heaslip said families planning to sell holiday homes would be "crucified"- they would not be able to find outside buyers and would have to rely on the local market. He was also concerned that it would put a lot of small house builders out of business.
Fergal O'Mahony of Thistlewood Holdings which specialises in building individual holiday homes in the west, said the tax would have a disastrous effect on house building at a time when they had to compete with the Spanish market. People who moved to the west in recent years had kept schools, post offices and shops going and it would be a shame if this couldn't continue. First-time buyers had no problem purchasing a house in the west.
Peter Tuohy, a Westport estate agent, said he expected holiday home sales to be down by at least 50 per cent this year because of the tax issue. "A lot of people who were a bit stretched to buy a holiday home will now step back and look at Marbella."
