HOUSING LED THE agenda during Leaders’ Questions for nine days over the last two weeks and the level of pressure on the government doesn’t appear to be dissipating.
Last week, the government scrambled to roll out measures to clip the wings of the investment funds buying up hundreds of properties and locking regular buyers out, we also heard that a vacant property tax could be on the cards.
The news comes some four years after the Peter McVerry Trust lobbied consistently for such a tax to be introduced.
In 2017, the charity even did a survey on the issue with Ireland Thinks where 62% of the public supported it back then.
The proposal for the tax was also included in Leo Varadkar’s leadership manifesto, but nothing came of it.
Frances Doherty from the Peter McVerry Trust said anything that can be done to bring vacant properties back into use – be they owned by investment funds or not – should be done.
Doherty said that whether it is investment funds, banks or any other body leaving properties vacant, “what they’re really doing is manipulating the supply”, which counters the argument that some politicians are making – that increasing supply will result in cheaper prices.
There are an estimated 200,000 vacant homes in the country, with the Public Expenditure Minister Michael McGrath saying last week that the local authorities plan to work with owners to bring them back into use.
Housing Minister Darragh O’Brien also confirmed they want to target investment funds that have large swathes of apartments lying empty.
There has been particular anger at reports that high-end apartment blocks are lying idle, with the Business Post highlighting recently that in midst of a crisis 100 of the 190 apartments in the 22-storey Capital Dock near Grand Canal are vacant.
But it is not just investment funds that are leaving properties empty if they can’t find someone to pay the rent being asked for.
Irish banks and vulture funds are understood to have hundreds of properties on their books lying vacant.
According to the figures supplied to The Journal, three of the country’s main banks have around 600 vacant properties on their books, though some are sale agreed.
Permanent TSB said the properties in its possession have reduced by about 50% year-on-year to 295 properties at the end of December 2020, of which 59 are sale agreed.
AIB said the bank currently has possession of around 250 vacant residential properties. It is understood that 58 are sale agreed.
However that number is expected to reduce as the bank continues to work with the Housing Agency to offer stock for sale to meet the country’s housing challenge, the bank said in a statement.
“Over a period the bank has offered in excess of 1,600 properties to the Housing Agency for sale. The Housing Agency has progressed the purchase of a significant number of these properties and the bank will continue to work directly with the Housing Agency with the aim of meeting any challenges relating to Covid-19 and ultimately the country’s housing challenge,” said a spokesperson for AIB.
Bank of Ireland says it has 55 vacant units currently, which are all pre-market, on-market for sale or sale agreed.
“We don’t hold on to properties unless there are impediments to selling such as essential repairs required or legal/title issues still in progress,” the bank said.
These totals are just for three three pillar banks, and do not include the number of properties in the hands of so-called “non-bank unregulated loan owners”, also known as vulture funds, or retail credit firms.
Doherty said that while it may not seem like a huge number of properties, at the same time, given the context of the number of properties available to buy on sites like Daft.ie, the numbers are significant.
In 2018, after criticism from the likes of the Peter McVerry Trust, the government commissioned a report to be done into the feasibility of a vacant property tax.
Indecon consultants – the same group that found that there was no need for a community banking system in Ireland given the variety in the Irish banking market – conducted an examination of introducing a vacancy tax and the impact it might have in increasing the available housing stock on the market.
The report found that a vacant property tax would not be recommended at the time, however, it said a major programme of compulsory purchase orders of vacant properties should be urgently activated.
It found that if the government decided to introduce the vacancy tax, it should be levied on properties in rent pressure zones which have been vacant for a period of 12 months or more and it should be imposed in the form of a surcharge on the existing Local Property Tax. (The finance minister has pledged to reform the local property tax system this year, and bring new homes, which are currently exempt from the LPT, into the taxation system).
Dublin city is a 'free for all' for vulture funds, Dáil told
Vacant property tax targeted at institutional landlords who leave apartments lying empty under 'serious consideration'
In theory, the report found that a vacant property tax “could re-activate significant segments of the existing housing stock” but it found that the reasons for vacancy are wide-ranging.
Over a decade after the financial crash, the policies from both the financial sector and the government for those that found themselves in mortgage difficulty, and either had to surrender their home or had it repossessed, are coming home to roost.
Donohoe has said investment funds have a role to play in the rental market, and that over 13,000 landlords have left the market.
Vacant properties lying on the books of banks and vulture funds, and the fact that one-off or accidental landlords have left the market, are not a coincidence.
During the last Fine Gael-led government the pressure was on to get a handle on the rising homelessness figures, while at the same time there appeared to be little sympathy for the buy-to-let landlords losing their properties to vulture funds.
The two issues were linked then, but more focus was put on the families that were losing their family home, rather than the trouble the buy-to-let market was getting into.
And the pressure has been a long time coming.
The Housing Market Monitor for the last quarter of 2020 found a significant decline in buy-to-let investors in the housing market, with these loans now accounting for less than 1% of mortgages, compared to 20% in 2006.
Without ordinary Joe Soap landlords with one or two properties to let, the market is ripe for big investors.
Again, the shape the housing and rental market is in should come as no surprise to those in government. As far back as 2014, it was reported that thousands in private rented homes faced homelessness because of the mortgage arrears crisis amongst buy-to-let landlords.
Threshold told the Joint Oireachtas Committee on Finance, Public Expenditure and Reform that buy-to-let receiverships were increasingly threatening the family homes of tenants.
Since 2012, the charity said it had seen a spike in the number of receivers appointed to buy-to-let landlords.
In April 2014, the charity said there were 3,700 receiverships in place over residential properties, resulting in tenants – people who made their homes in the private rented sector – facing the prospect of having to leave their home due to the property being taken over by a bank or vulture fund.
No news is bad news
Support The Journal
Your contributions will help us continue
to deliver the stories that are important to you
“Some families are even facing the terrifying prospect of having to leave their homes as a result of this situation,” said Threshold.
Despite families being forced to leave their rented accommodation, many of these properties were left vacant.
In 2019, Sinn Féin’s Pearse Doherty told Varadkar that mortgage holders and tenants were being treated in this way as a direct consequence of government policy, which he said was to roll out the red carpet “to these leeches”
Varadkar responded by saying that a review of the tax treatment of property investment funds would be reviewed. Tax incentives are brought in at a time to stimulate particular activity but are then removed at a later period when they are no longer necessary.
The issue of vacancy is “symptomatic of the dysfunction of in our system”, Doherty of the McVerry Trust said, adding that if there is going to be an improvement of the system, the issue of vacancy has to be addressed.
He said the situation cannot continue whereby there are some large multi-unit blocks in the city centre vacant for 20 or 30 years.
For two weeks, Leaders’ Questions has been dominated by housing, which culminated in the Housing Minister Darragh O’Brien and Finance Minister Paschal Donohoe hastily working on new measures such as ring-fencing new developments for owner occupiers, as well as a 10% stamp duty to hit cuckoo funds who buy up more than 10 properties.
Both within and outside government, the prospect of a vacant property tax is being welcomed. Fine Gael’s Louth TD Fergus O’Dowd said such a move would generate much needed housing supply.
“We have clear evidence from the city of Vancouver that it will successfully bring vacant units back into use, as they saw a 25% decrease in vacant properties following the introduction of the tax,” he said.
While Roísín Shortall of he Social Democrats said that in Paris, they tripled property tax on vacant homes to 60% to address the problem of properties being left empty.
“What does your government do? Shrug and continue feeding what little housing supply we have to the vultures,” she said in the Dáil recently.
It appears to be welcome that vacant properties are back on the agenda, but it has been a long time coming.