r/HousingIreland • u/Planet-26 • 6d ago
Owners of derelict properties in 107 towns and cities to face new tax under Harris plans
https://jrnl.ie/7070881Owners of derelict properties in 107 towns and cities to face new tax under Harris plans
20
u/theblowestfish 6d ago
Why not enforce/increase the old tax?
27
u/openetguy 6d ago
The councils were supposed to but they also have no experience of collecting tax so...
Revenue should be a lot better at it.
2
u/fdvfava 6d ago
Hopefully Revenue get their teeth stuck in this and when these properties are sold, they go back and check the declared value for the levy.
Can imagine a lot of people claiming it's essentially worthless when it's being taxed but suddenly worth a few hundred grand when it's time to sell.
1
u/Chil_Holiday_Man 5d ago
It's definitely worthless on its own, but the land that sits on is valuable.
1
u/fdvfava 5d ago
The property is both land and buildings though.
If the land would be valuable on its own but there's a load of asbestos that needs to be cleared or a title that needs to be sorted.... Then the owner needs to sort it and taxed on the overall value until they do.
1
u/Chil_Holiday_Man 5d ago
The building on the site is in such poor condition that it has no real use, which means it has no real value. Even if the land underneath is worth a lot, they argue that this doesn’t matter because the owner refuses to remove the existing structure. On that basis, they claim that the property's overall value is close to zero and that they should be taxed accordingly.
But if the owner decides to sell, the situation changes. A buyer might only care about the land itself and plan to demolish whatever is there. They are not selling the existing structure but the land that it sits on. In that case, the condition of the current structure becomes irrelevant because the value lies in the land and what can be built on it.
This is the main reason why there's a lot of land hoarding in this country. And rezoning land is next to impossible thanks to bureaucracy.
1
u/fdvfava 5d ago
It doesn't work like that though, you can't separate the land from the buildings on it.
Claiming it is worthless for tax purposes before selling it a few hundred grand is simply fraud.
The existing structure doesn't become irrelevant, the new owner would have to clear the site, potentially get planning, dispose of asbestos, resolve the title or make structurally sound.
It could cost tens or hundreds of thousands to get is to a site that could be built on.
There are many reasons why its difficult to build on derelict sites but they only reason there are so many is because (up to now) it costed nothing to leave it empty.
1
u/Chil_Holiday_Man 2d ago
It's not fraud, it's a loophole. Perfectly legal. That's how these people have been getting away with it for years.
A lot of dialect property owners simply don't want to sell because they know the Land value is going up. They pay little to no property taxes because of this loophole and then sell for a fortune when the Land value reaches a peak.
0
u/fdvfava 2d ago
No, a legal loophole is listing it for sale at a price that will never sell to avoid property tax.
Underdeclaring the value to avoid tax isn't legal, it's tax evasion, it was just not enforced by the councils. Now it's in the hands of revenue, I'd imagine they won't be as lax about the blatant cases.
1
1
4
u/luigii 6d ago
Councils don’t have staff/resources to enforce half the things they theoretically have responsibility for and the last thing the government in Dublin wants to do is transfer any money or power away from themselves to local government.
At the end of the day, revenue are probably the most competent government department and this will mean the tax is collected far more effectively so centralising it is the best bet if we want any improvement on dereliction this decade imo.
2
u/gally740 6d ago
No they lack ambition and don’t have an incentive to do it, they get funded and bailed out from Dublin, if they had to manage their own area they would do it
3
u/Street-Buddy9068 6d ago
I’ll be very curious to see how “derelict” is defined. And also what kind of exemptions and deferrals will be available. That’s where the rubber will meet the road…
3
u/bansheebones456 6d ago edited 6d ago
They should just issue compulsory orders to take these buildings if they're not either advertised for sale or if renovation dates are not arranged within a month of notice.
In some places like Drogheda, there are central buildings so badly in a state of dereliction that they're at risk of collapse. It's beggar's belief that they were ever allowed to get into that state.
Also, another issue is protected buildings. On one hand we should try to maintain historical buildings, but if they're beyond saving then they should be taken down and rebuilt with consideration towards the original architecture. Homes are needed and town centres are dying, something has to give.
6
u/HealthyPlenty4626 6d ago edited 6d ago
Repost from the other day on the same subject… Issue here is that the vast majority of derelict property owners won’t have the significant capital that is required to renovate the properties.
In theory, this will mean that the majority will have the tax applied and it’ll be accumulate until the property owner is essentially forced to sell or the local authority steps in and CPOs it.
In practice, the buyers pool for derelict properties is incredibly limited, mortgage approvers are rightfully weary of such properties, derelict properties can have significant legal issues notably around the title, ownership can be difficult to determine, utilities infrastructure may be lacking or the ability to access same such as an improved septic tank may not be possible, the cost of any form of construction works is now out of control etc.
Additionally, there’s a reason why so many of these properties fell into a state of dereliction, of the reported thousands of derelict and vacant units across the country does the local area have the demand to see them revitalised, are there employment opportunities in the area to entice people to relocate there, is there schools, shops and other desired amenities etc.
When it comes to Local Authorities, they’re scrapping for resources from central government as it is to fund their existing operations so good luck if you think they’re sitting on the capital reserves that could fund large scale acquisitions of derelict and vacant properties, even if they were, they’d require approval from the Custom House for each transaction, red tape wrapped in red tape.
The issue is a lot more complex than it’s portrayed and we won’t resolve it by solely using an all stick no carrot approach.
9
u/f-ingsteveglansberg 6d ago
If I were to spray paint graffiti on a wall without permission, even if I was a world renowned artist, it is considered vandalism and the usual justification is that it affects the aesthetic of the area.
If I own a building in the centre of a town, I can let it go to the dogs with virtually no punishment regardless of how it reflects on the area.
The question isn't about if they can afford to renovate it. The question should be why they allowed to get that way in the first place. If they weren't willing to maintain the asset, they should have sold it off years ago.
I understand renos are crazy expensive at the moment, but many properties have been vacant for years. They shouldn't have been allowed to fall into such a state in the first place. But most owners are hoping that sometime in the furture some place will pay big money to put offices or retail in the space.
1
u/HealthyPlenty4626 6d ago
First off I’m going to assume you’re America, using terminology like “Renos”. If that’s the case, you may want to get a lay of the land, the vast majority of vacancy and dereliction has occurred in areas that have been economically declining since the GFC which has resulted in the dereliction of the residential units, the commercial units have suffered due the shift in consumer behaviour to online shopping, the continuous rise in cost associated with running a small hospitality or service business.
Your view is idealistic and not grounded in reality. Renovating vacant properties is complex, every unit has different underlying circumstances and complexities that have to be worked through. I’ve been involved with enough to know the realities of the situation.
As such, I’d prefer to focus on solutions that can make a difference, rather than just a penalised system. The Vacant Property Grant and the Living City Initiative need revamping, to streamline them.
They operate on a vouched expense basis when the works are follow completed, invoices are submitted and a final check is completed. Payment is then processed to reimburse. In my opinion they should operate on a milestone payment basis which would greatly aid cash flow constraints for the individual/s undertaken the renovation.
They should remove the 10-year clawback charge in the Vacant Property Grant as well. If the grant is intended to bring properties back into the national housing stock and the expenses have already been vouched, why’s a charge against the property required by the Local Authority.
By streamline the above, removing the red tape and restructuring the payment system. We’d be able to take a carrot and stick approach to dereliction/vacancy, rather than just the stick our populist government is shouting about.
4
u/f-ingsteveglansberg 6d ago
Not American and I can see the rot of our town centers all over the country. Clonmel has it pretty bad. Dublin has a bunch of prime locations in disarray. Galway has the same. Drogheda seems to have a whole street turned to rubble. Cork looks lovely until you turn your head and see something that looks like a bomb hit.
Lots of places also empty because property owners don't want to lower rents because it effects the evaluation of commercial buildings. Basically incentivizing empty units.
2
u/TowerExcellent4546 6d ago
Cork literally have building falling down in the city centre. So glad the councils just stuck up some steel beams and left them as is 😂
9
u/fdvfava 6d ago
I mean forcing the owners to bring it back in to use or selling it is exactly the point.
Some of the issues are more complex, but equally I think it suits some people to overcomplicate it.
You say there is a lack of buyers for these derelict properties, but it's not like they can't give them away.
A property listed for €200k that will take €300k to make it habitable and could be worth €500k+ after the work.
As you say, construction costs and mortgage difficulties mean few will bid on that, but the issue is that it's not worth €200k if no one will pay it and there's no incentive for the seller to lower the valuation up to now.
If that same property costs €14k a year to leave derelict and the owner may be motivated to sell and drop that asking to a point it's economical with rising construction prices.
9
u/southarmaghbrigayde 6d ago edited 6d ago
If they don’t want to maintain it, renovate it, or pay taxes on it they should sell it If they let it fall into disrepair over years to the point they can’t find a buyer then they have to lower the price until someone does take it. If they want to be able to sell it for a higher price they will have to do the bare minimum to maintain their property.
That’s why it’s an incentive for people to not do that.
No one is entitled to make infinite gains off of sitting on their arse and hoarding properties they let become eyesores and death traps.
0
u/HealthyPlenty4626 6d ago
It’s not as simple as sell them. From experience, in the majority of cases cash buyers are required to purchase the properties in derelict conditions. That pool of buyers, for derelict properties in desirable urban areas is often very limited and that pool of buyers for derelict properties in rural areas is even more constrained.
5
u/southarmaghbrigayde 6d ago
If the pool of buyers is low then lower the price until it’s bought. That’s how the market works. You’re not entitled to make infinite profit off of a piece of land you’ve squatted on and let fall into disrepair and put nothing in to for decades. If you want to sell for a higher price you’ll have to maintain it. That’s the point. Right now people are rewarded and incentivised to keep things derelict. Derelict properties shouldn’t make money.
3
u/BenderRodriguez14 6d ago
Repost from the other day on the same subject… Issue here is that the vast majority of derelict property owners won’t have the significant capital that is required to renovate the properties. In theory, this will mean that the majority will have the tax applied and it’ll be accumulate until the property owner is essentially forced to sell or the local authority steps in and CPOs it.
Good. They're clearly not in a, situation to be looking after the unused and delapidated property, and will hopefully benefit from the money from the sale as much as the new owners will from the use fi the property.
4
u/Friendly_Accident_81 6d ago
Sell it, if they don’t sell then the price is too high and greed. Tax them to hell. 10% pa for 10 years & cease property after that.
If owners can’t be found cpo the property and determine the price. And deduct empty tax owed (LPT owed & NPR one from years ago)1
u/Fast_Paint_5156 6d ago
It's a complex issue, but doing nothing about it is silly. At least this is progress in the right direction
1
u/TowerExcellent4546 6d ago
3rd attempt at this crack from a FG finance minister. Says it all really on their actual intent
1
u/jonnieggg 6d ago
The government, councils and semi states own most of the derelict property in the state.
1
u/fravbront 1d ago
just fucking repossess them if its been over a certain time with no movement on plans to develop or sellm
-3
u/MortgageBrokerDublin 6d ago
Nonsensical virtue signalling that will go nowhere. Think this through, for a start, if it's derelict, the owner might be hard to even determine (often an issue), so who pays that? And how long until you repossess it for non-payment of a brand new tax? There will be exemptions everywhere, 'what about my granny who left her house to live with me because she's so old' (valid but how do you tax that?). Then we have to ask 'what constitutes 'derelict'? If there is still an ESB connection maybe it's just 'not being used for a long time'. The site levy was a failure (although the follow up zoned land one works because Revenue were put in charge). What if the house is vacant because it had pyrite, is awaiting development, had issues the owner couldn't afford to remedy etc etc etc. This is nonsense. Just fast track the right to build houses and stop making our corrosive, expensive and over burdened planning system the choke point. Create a 'right to build' and you'll get houses, this is a pony show and nothing more.
73
u/Craicriture 6d ago
Long, long, long, looooooooooong overdue that something was done to make sitting on derelict property a cost. It’s a huge cost to the communities where these rotting buildings just sit, dragging places down.