It is my pleasure to welcome one of our famous alumni of the Seanad, my colleague and friend, the Minister, Deputy Paschal Donohoe.
Finance (Local Property Tax) (Amendment) Bill 2021: Committee and Remaining Stages
Amendments Nos. 1 to 3, inclusive, are related and may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 1:
In page 9, between lines 32 and 33, to insert the following:
“(d) a liable person forms a view that the property has been damaged as a result of the use of defective concrete blocks.”.
The Minister is very welcome. Section 18 of the Bill purports to provide an exemption for those homeowners whose houses have been affected by mica or pyrite, but does it? It inserts into the Bill a new section 10D which states that residential property damaged as a result of the use of defective concrete blocks in its construction will be exempt from local property tax but only if it meets certain conditions. Those conditions are, as set out in section 18, if the property has been or is being remediated or, under subsection 10D(1)(a), if "a confirmation of eligibility in relation to the property has been issued". What does "confirmation of eligibility" mean?
Under subsection 10D(6), confirmation of eligibility has the meaning given to it by the regulations that gave effect to the current and flawed redress scheme, whereby the applicant can have eligibility confirmed only once he or she has made an application to the local authority that includes the engineer's report confirming damage caused by mica or pyrite. To spell that out to the Minister, Senators and those whose homes have been damaged by mica or pyrite, under this legislation homeowners will be required to have an engineer's report, which costs in excess of €6,000, in order to qualify for this exemption to the local property tax. To put it another way, if homeowners whose houses are crumbling around them as a result of the mica scandal are unable to fork out €6,000 from their own pockets for an engineer's report, they will be charged local property tax by the Minister on homes that are not safe, homes that have lost their value, homes that are or will not be liveable in unless a 100% redress scheme is delivered. Can the Minister not see that this exemption is unworkable? Can he not see that requiring an engineer's report to qualify for an LPT exemption, when the engineer's report costs several times the annual LPT charge, simply does not make sense? Can the Minister not see that this Bill, as it is written, will charge these homeowners local property tax as a result of his Government's flawed and broken redress scheme?
Our amendments are sensible. They are what is necessary to ensure that homeowners affected by mica are not charged local property tax. I urge the Minister to accept these amendments in the interests of these homeowners. Amendments Nos. 1 to 3, inclusive, will allow homeowners whose houses have been damaged or destroyed by mica or pyrite to apply for an exemption from local property tax on a self-assessed basis, with Revenue able to take a look-back exercise to assess eligibility for exemption once a new 100% redress scheme is in place.
Listening to Senator Gavan, I am obviously sympathetic to anybody who is suffering from defective building materials and many people around the country are in dire situations. In that regard, a scheme is being put in place and that is a debate for another day.
Looking at the amendment that is being proposed, however, even if Senator Gavan is serious about addressing this issue and if he genuinely has concerns that this section is, as he said, unworkable, the notion that his amendment No. 1 could be implemented to allow the householder to form a view that he or she was entitled to the exemption essentially must also be unworkable. One could not have a situation where a householder was allowed to form a view that his or her property had been damaged as a result of defective concrete blocks. Without any safeguards or tests or any other aspects or qualifiers, I could form the view that my house, which thank God is not affected by defective building materials, is affected and thereby apply for and seek an exemption.
Perhaps Senator Gavan is right. I would be interested to hear what the Minister has to say about it. What this Bill is trying to do, however, is create an even playing field where people can establish, as a matter of fact, that there is an issue rather than having a situation which to my mind, I respectfully suggest, would be a free-for-all where anybody could say they have formed the view that they fall into this category, and therefore, should be entitled to an exemption. Whether the section itself is unworkable, I do not know. I believe there is a good and reasonable effort here and I accept the criticisms of it. What is proposed is totally unworkable in my opinion, however.
It is important to say that not everybody feels the confidence in terms of accessing the exemption and that there would be measures. Again, I am noting that the section contains the words "may require", which will be really important. It will be excessive if it is required for a person to provide an engineer's report in every instance. We are going to create a situation where people will have to spend as much or much more to get that exemption.
I have a single point, of which the Minister will be aware, about the legislation I brought forward in terms of quality in public procurement. While this affects individual residential situations at present, similar issues have arisen with regard to public buildings. Taking an approach that does not just look to lowest price but places a much higher emphasis on quality in our public procurement will help us avoid these kinds of situations in the future.
I wish everybody good morning. I thank Senators for the amendments that have been tabled and for the facilitating and scrutiny of this legislation. I will begin my comments on this amendment by absolutely identifying and appreciating the anxiety, huge stress and damage that has been caused to families and homeowners, which in turn has been created by the damage that has been done to their homes by the material that was used to build them. It has caused such harm to so many. The Government at the moment is reviewing our response to this huge challenge for many people.
The reason I am not in a position to accept the amendment is because of the way we have structured this exemption. To access this exemption, a person needs to be part of the scheme that is in place now to recognise this issue for homes that are currently affected by it. Access to that scheme is through a regulation that has been put in place by the Department of Housing, Local Government and Heritage. That regulation and access to this exemption is in turn based on a similar exception we had in place for pyrite.
At present, all of this is being reviewed by the Department of Housing, Local Government and Heritage. It could well make a decision that it will change recognition of damage through changing the regulation that is in place. That is where that should happen, rather than through the local property tax legislation. That work is currently under way. I understand it will be concluded by the end of this month. It really is not appropriate that I try to indicate in a local property tax Bill what we think are the right criteria for local authorities or the State deeming that a house has been affected by mica. That is a policy issue on which further progress probably needs to be and may well be made. With respect to Senator Gavan, however, I would contend to him that this work should not happen in the local property tax Bill. It should happen through the Minister for Housing, Local Government and Heritage through the regulation. I believe that will be looked at in the context of the working group that is in place on this issue. That is the only reason I am not accepting the Senator's amendment. The place for these issues to be resolved is not in the LPT legislation. If we did, it would prejudge the working group that is under way and then put in place access criteria that are not consistent with how pyrite is currently being dealt with. For those reasons, while I absolutely appreciate the intention of the Senator with regard to this issue, I am still not in a position to accept this particular amendment.
We will agree to disagree at this point.
I move amendment No. 2:
In page 10, between lines 22 and 23, to insert the following:
“(d) For the purposes of an application under paragraph (a), the Revenue Commissioners may specify the form of an application and may require that the following information is provided to them:
(i) the address of the residential property;
(ii) the nature and extent of the damage caused by the use of defective concrete blocks in the construction of the property;
(iii) any other particulars the Revenue Commissioners may reasonably require for the purpose of considering the application.”.
I move amendment No. 3:
In page 11, between lines 14 and 15, to insert the following:
“(5A) Notwithstanding subsection (1), a residential property shall not, for the purposes of section 16(1), be regarded as a relevant residential property, where paragraph (d) of subsection (1) applies, in relation to ten consecutive liability dates commencing where the first liability date falls on or after 1 November 2021.”.
I will briefly note I did not actually get an answer - I might not get it now and that is fine - in respect of those people whose property tax has decreased and the statements that were made. This is when we are into the midpoint in valuations. We have been told that due to the change in the midpoint of valuations, we are maintaining progressivity. However, I am concerned that, for example, as I mentioned, the Minister, Deputy Varadkar, and others told us that those with properties of €1.6 million will potentially be paying less. I am concerned about that 11% decrease for those who have the decreased rate. How many of them are in those higher bands? That was a question I asked but on which I did not get an answer during the Second Stage debate. I obviously cannot table any amendments to it because they would be out of order automatically. I believe, however, the principle of progressivity within our taxation system is really important and in terms of any revisions of our taxation system. Of course, under the sustainable development goals, it is required that any new policies we bring forward are progressive and reflect that. I am, therefore, concerned in terms of the decreases in property tax and how much of that is concentrated in the higher level. I know it is not all there but that was my question.
I welcome the Minister here today. It is great to have him in the House, especially on our last day of session. I will speak very briefly on this amendment. I welcome this particular LPT Bill coming before us, especially for the county of Galway, as we are going to be able to have a little bit more income coming in, including from the backdating of those residences. It will be fantastic to get investment coming into our local authority.
I refer to the bands and banding and the properties that are being included.
The bands for the properties that are included date back several years. Will the rates we are considering impact the local authorities? The impact of the new bands and the different rates according to the bands should be positive for the local authorities.
I agree with Senator Higgins that it is important to have a progressive tax system. However, progressivity does not mean that those who are paying a certain rate now should necessarily stay at that rate or pay more. I am not saying that is what Senator Higgins was saying. There has been an unfortunate latching on to the notion that people who may have very valuable properties might see a decrease in their local property taxes. However, if that is the effect of the bands, it is entirely appropriate. I think this would happen only in a fairly minute proportion of the cases. If they do experience a decrease in local property tax, it means they have been paying too much over recent years relative to their neighbours. The key purpose of the Bill is to provide equalisation - a fair and level playing pitch. Some people who have been paying no local property taxes since their houses were built in 2013, or whatever year it was, will now be brought into the net. That creates a greater total fund coming from LPT, which allows most people to experience either no change or a reduction, which is the important part.
I reiterate what I said on Second Stage on the flexibility of this. There is a missed opportunity which unfortunately we cannot amend because it is not mentioned in the Bill and given that we are in the Seanad, we are restricted on the extent to which we can do that. One of the missed opportunities in bringing in local property tax reform legislation is not trusting in local authorities and not allowing councillors to make a real decision about the rates householders in their areas should be paying. The 15% buffer either side of the full rate represents a missed opportunity for us to say we trust local authorities to decide what rate their householders should be paying. Why not allow them to vary it by as much as they believe is appropriate - perhaps even by 100% one way or the other? The councillors on the ground understand what is reasonable. There is a lack of trust of councillors to make that decision when in fact that is the direction we should be going in. There is a missed opportunity in this part of the Bill not to afford them that latitude.
The Minister is very welcome to the House. When the Minister of State, Deputy Fleming, was here earlier, I made reference to my own county based on the bands. Longford has 17,000 properties registered and 79% of them are in bands 1 and 2. Based on the new figures, by 2023 there would be a reduction of up to €1.5 million in the income we will be getting. I know the Minister has given a commitment and I wish to ask him this on the record. It has been said in the local media that Longford will face a shortfall, but we will not. I want it clarified that no local authority, which would see a reduction in income from the local property tax based on the new bands, will face a shortfall in funding to provide their services. I wish to get that commitment on the record.
I completely agree with Senator Ward's point about discretion. It would result in much less of a binary discussion every year if local authorities had the flexibility to be able to determine the level of reduction to a decent degree. Rather than having the blunt 15%, a more nuanced tool would have been welcome.
On the higher level, I am not picking out these; these were the examples that were picked out. I have a concern over people's perception of progression and progressivity in tax as well as the fact of progressivity in tax. It is not helpful to have the Tánaiste talking about certain properties in specific neighbourhoods and saying the amount they will be paying in local property tax will reduce when he is talking about houses valued at €600,000, €675,000 or €1.6 million. That was for a targeted audience at a particular time but it is not useful. That is why we want to ensure we have progressivity.
I also have concerns that the progressivity peters out just below €2 million. What about a property worth €3 million or €4 million? The reality is that we have properties with such values. We talked at length about the exemptions at the bottom of the scale but we should also look at the exceptions at the top. We will probably come to it later, but that is why I believe those who own multiple properties might need to be placed in a band of their own at the top.
I thank the Senators for their contributions. I will take a step back to look at what we are doing with local property tax. The evidence from other countries that have had property tax regimes in place for much longer than we have is that the difficult moment for those regimes happen at two points in time. The first one is when the local property tax is implemented for the first time and the second one is when the first revaluation happens. In many countries it is done on the basis of self-assessment. If a local property tax regime can cross the hurdle of being implemented comprehensively and get the support of all taxpayers, it then needs to cross the next hurdle of the first revaluation taking place. They are the most significant moments in the cycle of the local property tax regime.
I hope that when this revaluation occurs, we will get beyond that and we can look at the role of the tax in three years' time when we are having this debate again. At that point the issue Senator Ward raised regarding the application of the LAF could be considered. The reason I did not do it now is that while we have done extensive modelling on what this new structure will mean from a revenue point of view, in truth we need to see what will happen once we implement it. After the revaluation has occurred, we will have a far better idea of the stability of revenue.
Because of my concern about maintaining the yield and increasing it a bit by introducing new taxes, I felt now was not the right time to broaden the discretion and breadth of the LAF variation in the way the Senator suggested. However, once the first revaluation has occurred, the discretion that local authorities have and the choices they make should be definitely considered. The Senator has raised an important principle. However, because the first revaluation is so important, we need to get that done first.
Senator Higgins spoke about the progressivity of the tax. If the value of someone's home has increased in line with the national average of approximately 75% since 2013, there is every possibility that their local property tax bill will be unchanged or it will change a little bit in either direction. If the value of someone's home has increased by less than 75% in recent years, he or she may get an LPT bill decrease. People whose homes have increased in value by more than 75% are likely to face an increased LPT bill. We have looked to manage the affordability of the increase for some by widening the bands and cutting the rates. For the minority of the homes, the value of which has increased by more than 75%, we are doing what we can to ensure their increased bill will be affordable.
Those principles apply to homes of all values. For homes that are at different values - the more expensive homes or homes that would have a lower valuation - those principles still apply. That is a consequence of having so many homes, the valuation of which have all changed in different ways.
Senator Higgins spoke about the reality of progressivity and the need for progressivity to be perceived. That is why we have introduced an extra rate of 0.3% for homes above a certain value of €1.75 million. It is in an effort to maintain progressivity and the reality of progressivity. However, that progressivity does not peter out at that point.
The way the liability is calculated, then, is for that part of the value which exceeds €1.75 million. The tax is applied for that portion of the value of a home which goes above €1.75 million. My contention is that we are seeking to maintain the principle of progressivity, but I also note that it will apply to all homes, regardless of value.
Turning to the point made by Senator Ward regarding additional discretion for local authorities, I believe we will return to that point. It will be valuable though for us to get this first revaluation done. It will no doubt bring up all kinds of challenges when we undertake it, and it will begin in November. We will then be at a point where the base of homes taxed as part of the local property tax increases every year. We do not have that mechanism now and it creates real issues of equity. It is important that we make progress in that respect and this is the thinking behind this section of the Bill. I thank Senators for their contributions.
Amendment No. 4 is in the name of Senator Higgins. If Amendment No. 4 is agreed to, then amendments Nos. 5 and 6 cannot be moved. Amendments Nos. 5 and 6 are physical alternatives to amendment No. 4. Amendments Nos. 4 to 6, inclusive, are related and may be discussed together, by agreement. Is that agreed? Agreed. I call Senator Higgins.
I move amendment No. 4:
In page 18, to delete lines 24 to 27.
This amendment concerns the discussion we had in the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach concerning a tax on vacant properties. The Minister told us then that was almost the information gathering stage and perhaps the introduction of such a measure would come later. In the text of this Bill, though, I am concerned about the constraints placed on that information gathering process. It is framed in a way which will make it very difficult for this information gathering process to translate into action concerning a tax on vacant properties.
The Minister made a strong case for his perspective, but I believe we should be bringing in such a tax, with certain caveats and exemptions, on vacant properties now. However, even accepting the Minister’s argument that we should have an information gathering stage and assessment in this respect first, I am concerned by the framing of the provision dealing with whether a house is in use as a dwelling. Subsection 2 of the proposed new section 39A of the principal Act states that information "shall not be used for any purpose other than the compiling of statistical information in relation to residential properties in the State which are not in use...".
Effectively, therefore, a caveat is being introduced stating that the information collected will not be usefully available in respect of the potential introduction of a vacant property tax perhaps until we have another revaluation in three years' time. We have a crisis in housing now. We have been told that every tool must be used and that they are all necessary, including all kinds of things about which I have many concerns, such as the use of public lands. Vacant properties, however, are also a concern. If it does emerge that there are many such properties in Ireland, then we cannot afford to and nor should we wait for three years until the next revaluation to ask owners if their properties may be vacant in respect of a levy. The Minister talked about the difficulty of introducing these systems. It would also be an unnecessary and laborious process to have to introduce a brand new system at some stage between now and the revaluation in three years to again ask everyone in this State who owns property whether those properties are vacant.
The opportunity to gather that information for the purpose of the introduction of a vacant property tax exists in this revaluation process, albeit the Minister is not using it for that purpose now and it is not in this legislation. Mention was made previously of difficulties with the general data protection regulation, GDPR, in this regard. There is nothing in the GDPR which states this cannot be done, but the situation is being created where the information gathered for the purposes of a vacant property tax could now be constrained under that regulation. However, people are already being asked to share a great a deal of information on foot of this legislation which could be used for revenue purposes. GDPR is very clear. Things are done based on consent or legislation. We have legislation being proposed here and there is absolutely no reason why we cannot undertake my proposed measure within it.
I suggest the removal, therefore, of what is an unnecessary caveat. If it is to be inserted though, a clear other purpose should be included as well. The main point in this regard is that information must be given for clear purposes. I have suggested in my amendment No. 5 that such a clear purpose could be defined as “such use by the Revenue Commissioners as may be required in respect of a levy or tax”. If we wanted to be more specific, then we could describe the clear purpose as meaning “such use by the Revenue Commissioners as may be required in respect of a levy or tax on vacant residential properties or a certain category of vacant residential properties”, as set out in my amendment No. 6. Those are clear purposes and there is absolutely nothing stopping the Minister putting such purposes in the Bill to enable the information collected under the auspices of this legislation to be shared for the purposes of the collection of the local property tax as it stands and for such related purposes by the Revenue Commissioners.
It would be really useful to do so and we are already asking people to include many different types of information in their local property tax returns. We may discover from those returns that there is a pattern of large-scale property vacancy and that many such properties have been vacant for long periods of time, for example. This is one aspect of market logic, but that may be a discussion to have another day with a different Minister. Of course, situations exist where artificial scarcity drives up prices and has value. We have seen it being done, and being done in apartment buildings right here in Dublin. It is not a nefarious plan, but market logic. It is how the market works. If there is such a pattern of large-scale property vacancy, as we have heard there is, then this is the chance to get the information to enable us to act in that regard.
My later amendment, which I am not sure we will get to, is concerned with instituting special measures for those property owners with perhaps 100 or 1,000 properties and it suggests they should pay a little more. A new calculation mechanism may be needed for the local property tax in those circumstances. However, even including a signal regarding the potential intention to introduce a tax on vacant properties under this legislation could itself have a positive impact. It would encourage people to consider not retaining a pile of vacant properties and to ensure such properties are being used as homes. A positive signal could be sent through this legislation regarding the potential introduction of a vacant property tax and that could have a positive impact on the market. I am worried that subsection (2) of the proposed new section 39A sends the opposite message, however, that we are not going to do anything about this situation for three years.
Following on from Senator Higgins's point, many of our towns and villages have vacant properties. However, many good schemes are also coming from the Department of Housing, Local Government and Heritage, such as the repair and lease initiative. It is important for us to understand that 100% of the revenue generated by this local property tax will go back to the local authorities. It will fund our services, including our parks, roads, footpaths and libraries. That is what this local property tax is for and some of our local authorities are in dire need of such funds to get some of these services across the line.
Regarding vacant properties, the repair and lease scheme and the Government's support for it has been very welcome. Hopefully, this is the type of measure that we will see continue to encourage owners of private properties to engage with local authorities and the repair and lease scheme to get those properties repaired, returned to the requisite specifications, leased out and brought back into use again to make our towns and villages come alive. We have a great shop enhancement scheme in Ballinasloe. It is an initiative under the auspices of the town and village renewal scheme overseen by the Minister for Rural and Community Development, Deputy Humphreys. We would love to see many more of those enhancement schemes, and painting is one example of what is undertaken, in towns and villages. Hopefully, such endeavours will encourage more people to take up properties.
Senator Higgins's contribution regarding a potential vacant homes tax highlighted an open issue which demonstrates the need for the collection of further information in this respect.
It is a very reasonable and understandable position to adopt. She said she was in favour of such a vacant homes tax, with certain caveats, and that is a very understandable and legitimate position to take. My expectation is that once we get into a debate on what those caveats are, it will pose a question regarding the utility of the tax in the first place. If more exemptions are put in place, it is possible that the number of properties that are affected by such a tax could begin to decrease quite quickly. The truth of it is that none of us knows yet what that trade-off is because we do not have the kind of valid and hard data needed to answer those questions. For example, if such a tax is introduced, should it be implemented differently in areas that are rent pressure zones as opposed to areas that are not? When we begin a debate on exemptions, if we get to such a point, should we provide an exemption for a home that is empty for family reasons? If so, how many of those homes are there? If we are going to provide such an exemption, for how long should such a home be empty in the context of the trade-off if that home was used in another way to provide a new home to a different person? These are all trade-offs we will need to discuss.
I predict that if we get to a point where I make a proposal in regard to such a tax, the call for such a tax to be implemented will be quickly followed by many legitimate cases that are made for exemptions from that tax. It is in an effort to get ready for such a potential point that I believe there is real value in, once and for all, getting a dataset in place so we can have that debate.
I entirely agree with the point made by Senator Higgins that if we are looking at the implementation of such a tax, the mere signalling effect of such a debate beginning can, of itself, have a value. I think we will begin to see such signals develop when we get to a point where taxpayers paying the local property tax electronically can go onto the portal and tick a box to indicate that a home is vacant and, if so, why.
In regard to the Senator's point on how long it will take for that tax to be implemented and the role this data could play, first, if we generate enough data that indicates there is a solid basis for such a tax to be introduced, I will not be waiting for the next revaluation date. If and when information becomes available to me that shows there is genuinely a group of homes that we believe are empty for longer than the Oireachtas feels to be worthwhile, and we want to tax that, my intention would be to not wait until the further revaluation happens. The reason for that is, of course, the great challenges we face in providing enough homes for those we represent and serve.
In regard to the limitations that are in place with regard to data collection under this Bill, these limitations were put in place after we consulted with the Data Protection Commissioner. It is the view of the Data Protection Commissioner that such limitations are required, and we need to be consistent with regard to the advice that we receive.
On the amendments put forward by Senator Higgins, amendment No. 4 would remove any limitation as to what that data could be used for and I do not believe that would be appropriate. As interested as I am in seeing what this data would be, there should be limitations in place regarding what that data could be used for in the future. If Senator Higgins believes there are too many limitations in place, I would say to her that having no limitations at all is equally problematic. Amendments Nos. 5 and 6 extend this limitation for the purposes of a future levy or future tax. Amendments Nos. 5 and 6 are, therefore, inconsistent with amendment No. 4, given that amendment No. 4 refers to no limitations and amendments Nos. 5 and 6 state that there should be limitations in regard to how this data could be used. Moreover, I ask the Senator to consider how appropriate it is to collect personal data for use in regard to a tax that does not yet exist. There are important issues that mean it is not appropriate at this point to accept the amendments.
In regard to this data and information, and its role in the actual execution of the tax, if I recommend to Government and the Oireachtas that we go ahead with this, and if we go ahead with a vacant homes tax, that would be in the context of the local property tax regime. The local property tax regime is based on the principle of self-valuation, so we then have to ask homeowners to form a view themselves in regard to whether their home meets the criteria of vacancy that could be set out in a future potential tax. Therefore, in any event, even if I accepted Senator Higgins's amendments and believed that, in particular, amendments Nos. 5 and 6 should be accepted, and if the Government and the Oireachtas decide to deal with the issue of vacancy through the local property tax regime, that local property tax regime is fundamentally based on the principle of self-valuation. We would then be asking homeowners to say to us whether their home is meeting the criteria of a new area of the local property tax structure. This would mean we would have to question the value and utility of the data we have collected up to that point, beyond what I am looking to use it for, which is to answer the question of whether this tax is needed and, if it is needed, what would be the number of homes it could affect the use of.
It is for those reasons that I am not in a position to accept Senator Higgins's amendments. Nonetheless, her contribution raises very valuable issues that we will be coming back to, which are the trade-off between the breadth of a tax base and the exemptions to that base and, if more and more exemptions are put in place, what is the impact on that tax. However, in order to cross that bridge, the first bridge we have to get to is understanding how many homes could be affected by such a regime, and that is what we are looking to do here.
In regard to the fact of there being variations in amendments Nos. 4 to 6, inclusive, that is the nature of the situation when we have legislation going through all Stages. The presenting of options has to happen side-by-side on Committee Stage rather than Members being allowed to have a discussion and a different version on Report Stage. However, amendment No. 6 is completely legitimate and, while it is obviously not going to pass today, I urge the Minister to discuss it with the Data Protection Commissioner. I believe it has a clear purpose and we collect things for particular clear purposes. Once it is clear what that purpose is, that purpose does not have to be current and it can be future, but it must be a clear purpose. The amendment sets out a clear purpose in respect of the levy or tax on vacant residential properties, or a certain category of vacant residential properties. That is quite a clear purpose and would be a legitimate and appropriate use because there is that concern with regard to gathering the information and how the information is used. It seems a whole process of self-evaluation is about to be undergone in the autumn, a review is scheduled for three years' time and it seems there would then be an entirely separate process of self-evaluation related to the vacant property tax. I worry that the requirement for such a measure could delay what may turn out to be a very important measure.
In regard to those different categories and exemptions, I do not think it is going to be as big or as complicated as the Minister thinks. There will be some exemptions, and I hope we will get a chance to talk on one of the key areas in the next few minutes.
I am not sure if this information will be compiled as part of that statistical information, but it is different if somebody has a vacant property and if somebody else has 50 vacant properties. Gathering the information and simply attaching it to each property is different and it is probably not what we need in terms of identifying the patterns. For the same reason, we also need to look to where there are multiple properties owned by somebody, which may be legitimate in the case of one, but the same argument cannot stand in 50 different instances. Does the Minister know what I mean? The concern is not just about an individual vacant property, it is about groups or suites of vacant properties. In compiling the statistical information and preparing this issue, which will need to move forward in the autumn, the Minister will get more support across the House than he might conceive. There will be exemptions, but I do not think they will delay us very much. The question of multiple vacant properties must be specifically addressed.
I am not concerned at what those trade-offs could be. I am just saying that we could get to a point where there are trade-offs. That is all. While it has not happened in the debate so far, although it may have happened on Second Stage, normally, when we are having discussions about local property tax, the case is made for people who should be exempted from local property tax, as opposed to making the case for all those who are paying for it. I am just indicating that it is possible that that could happen if the Government decides to go ahead with a tax on vacancy.
I find the use of language quite interesting. The reference is to a "vacant residential property". Many vacant residential properties are people's homes that they are deciding not to use. A property that is vacant could be vacant because it is a family home and the family has decided that nobody is living in it for whatever reason. They are the kind of issues we would need to examine.
On the issue raised by Senator Higgins regarding an individual owning many different homes that are vacant, that is something we will need to tease out. In terms of individuals, companies or investors, I would be interested to see whether it is possible for enough homes or properties to be vacant that would have an impact on general rent levels. In any event, Senator Higgins is raising many very important points. If we get to the stage that we are going to make such a change in the taxation of properties that are vacant, it will be at that point that many of the issues the Senator is raising will need to be teased out.
The term "residential property" is the language of the Bill so that is why that is the language of the amendment. I will withdraw amendment No. 4 as a valid point has been made in respect of it.
I move amendment No. 5:
In page 18, line 27, after "dwelling" to insert "and such use by the Revenue Commissioners as may be required in respect of a levy or tax".
I move amendment No. 6:
In page 18, line 27, after "dwelling" to insert the following:
"and such use by the Revenue Commissioners as may be required in respect of a levy or tax on vacant residential properties or a certain category of vacant residential properties".
Amendments Nos. 7 and 9 are related. If amendment No. 7 is agreed, amendment No. 9 cannot be moved. Amendment No. 9 is a logical alternative to amendment No. 7 and they may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 7:
In page 21, between lines 28 and 29, to insert the following:
41. The Minister shall, by 1 December 2022, lay a report before both Houses of the Oireachtas setting out policy options and recommendations in respect of the potential introduction, under the Principal Act or the Act of 1997, of a new levy or tax, or an increase in levy or tax in respect of residential properties which are vacant for a period longer than 12 months.".
I will be very brief because I am keen to finish the set of amendments. Amendments Nos. 7 and 9 basically relate to the same question on the vacant property tax and to the idea that the Minister would provide a report by December 2022, although I hope it would be sooner. Ideally, we should be looking at having a report next autumn. It is asking the Minister to make a commitment. I would like to revise my own amendment and ask that the report would be laid before both Houses by next December. I ask that the Minister commits to actively engage with both Houses of the Oireachtas and the committees in respect of the vacant property tax in the next 12-month period. I will be brief in order that we can move to the other subject matters.
I will be equally brief by saying to the Senator that it is very likely that we will have engagement on this matter well before December 2022.
Amendments Nos. 8, 10 and 11 are related. Amendments Nos. 10 and 11 are logical alternatives to amendment No. 8 and may be discussed together by agreement. Is that agreed? Agreed.
I move amendment No. 8:
In page 21, between lines 28 and 29, to insert the following:
41. The Minister shall, by 1 December 2022, lay a report before both Houses of the Oireachtas in respect of the data obtained under the provisions of this Act with regard to the ownership of residential properties.".
Amendment No. 8 could apply to all the statistical information that the Minister is compiling. The amendment refers to the statistical information that we have discussed on vacant properties but there will be statistical information of other kinds, including the information that would be created by my amendments Nos. 10 and 11, and I seek that it would be shared with both Houses of the Oireachtas and that there would be a report looking at the data on the ownership of residential properties - of course, not looking at personal data in any respect but looking to that statistical data so that we can address and have the discussions we need to have on the information and on the patterns which have emerged.
Amendments Nos. 10 and 11 specifically set out a request that there would be compiling of statistical information and identification of trends on the patterns of quantities of residential property ownership in respect of both this Act and the principal Act and that policy options or recommendations might be set out regarding the potential introduction of differential rates of local property tax on residential properties where such properties are owned by persons who: "own two or less residential properties"; "more than two but less than twenty"; "more than twenty but less than fifty"; "more than fifty but less than one hundred"; "more than one hundred but less than one thousand" and; "more than one thousand residential properties".
This is the crux. If we simply look at each property and we do not look at the patterns of ownership but then we have those exemptions which people rightly pushed for, that recognise the real and social circumstances of individuals who are the owners of those residential properties, it is appropriate that we look at that when we are considering matters such as exemptions. For example, when we looked to first-time buyers in the past we considered whether exemptions might be needed for them. Similarly, we should be looking to the multiple property owners, to those who own entire blocks of buildings and sometimes almost neighbourhoods of residential properties, the large real estate investment trusts that in many cases own portfolios of residential properties or half an entire housing estate. They are different, as the first-time buyer was different on the other end, and are at the top end of the scale. It is appropriate that when we are looking at vacant properties, rather than saying we are just going to look at the property, that we compile statistical information that looks at the patterns of ownership and what additional contribution could be made by somebody where, although perhaps it is a family home, the property owner owns multiple properties and it is part of an investment suite. It would be reasonable that we might look to an additional treatment and change in the calculation algorithm to have a measure that would reflect situations whereby somebody owns multiple properties. I included a tier of "more than one thousand" because there are those who own more than 1,000 properties.
There are those certainly in that space between having 100 and 1,000 properties. I was going to go from 100 to 500 but I thought about how long I could make this list of differentials. What I have tried to capture here is the difference between the person with a home and the person with a second home. The latter is a separate category and we have dealt with it in the past. There are also the small landlords who might own a building or a place with five apartments. They are captured here. The larger investors with between 50 and 100 properties are commercial property investors at that point. Then there are the huge international investment funds that own hundreds or thousands of properties here, Vancouver and elsewhere in the world. It is reasonable we ask them to pay a little bit more towards the property tax. This is why I am asking the Minister to look at the policy options. He can compile information. As he has indicated, I know he likes to gather information first. We can gather this information and the Minister can share it with us in the Oireachtas so we can engage with him on it and consider it. I would like it sooner than the next three-year review but I set the date of October 2022 so it would be there in time for the next three-year review. We can consider the potential introduction of additional tiers or structures in our property tax for multiple homeowners.
There are three points on this. It is worthwhile considering the dimension of this debate, which is that individuals or companies may own large groups of homes and properties but this is because they have built them. If they did not own them these properties would not be built. If supply is part of how we respond to the great challenges we have in housing, it poses the issue that we may find the reason companies, funds or individuals own a larger group of properties is exactly because they built them with a view to owning them.
On the interesting and important point the Senator makes regarding understanding better the patterns of ownership in our society, the data already exist. They are published by the Revenue Commissioners in the statistics section of their website. Much of the information the Senator is looking for is publicly available. At present, there are 177,000 property owners who own two or more properties. The statistics available to us are based on the categories of two properties, three to five properties, six to ten properties, 11 to 20 properties, 21 to 50 properties , 51 to 100 properties, 101 to 200 properties and 201 properties and above. The published figures indicate that in 2020, 100 persons owned between 101 and 200 properties and no owner had more than 200 properties. Local authorities and approved housing bodies are excluded from this.
The Senator in her contribution said there are investment funds that own hundreds of thousands of properties in Ireland. There are not. There is an ongoing debate regarding the role of investment funds and the contribution they make to the ownership and the supply of properties but it is not based on the fact that they own hundreds of thousands of properties in Ireland. Nonetheless-----
I said hundreds or thousands not hundreds of thousands.
That is not what I heard but I am sure that is what the Senator did say so I thank her for clarifying that. Even at that point, Senator Higgins is right. Understanding patterns of ownership is very valuable in the debate on public policy. The data already exist. For this reason, I ask that the Senator withdraws the amendments.
There are large-scale owners in Ireland and the information we have at present peters out at that level. We need more information. It is not that they are building everything. Let us be clear. We have heard reports of investment funds sending people around to bid on second-hand properties all over the city. We have heard the stories of people who are going to buy apartments because there is a constant market. They are there as actors and they are outbidding people who want to buy family homes. This is the reality. They are outbidding for estates. They are not the main drivers. The idea that the investment firms have built all of these is not necessarily true. Builders built them and they will build them for whoever asks them to build them. I hope more often in the future this will be the State. There is a market in second-hand properties that has been very much saturated by commercial and speculative actors. I live in the city centre surrounded by apartment buildings and I see it happening all the time.
I never disputed the fact there are individuals or firms that own multiple properties. I am simply making the point that more data are available than the amendment might suggest. I agree with Senator Higgins that patterns of ownership are a very influential dynamic in understanding what happens in the property sector. She is definitely correct with regard to this.
I move amendment No. 9:
In page 21, between lines 28 and 29, to insert the following:
41. The Minister shall, by 1 December 2022, lay a report before both Houses of the Oireachtas outlining any potential steps for the introduction, under the Act of 1997 or the Principal Act, of a levy or tax on residential properties which are vacant for a period longer than 12 months.".
I move amendment No. 10:
In page 21, between lines 28 and 29, to insert the following:
41. The Minister shall, by 1 December 2022, lay a report before both Houses of the Oireachtas which shall—
(a) compile appropriate statistical information and identify trends in relation to the patterns and quantities of residential property ownership in respect of this Act and the Principal Act,
(b) set out policy options or recommendations regarding the potential introduction of differential rates of local property tax on residential properties under this Act and the Principal Act where such properties are owned by persons who:
(i) own two or less residential properties;
(ii) own more then two but less than twenty residential properties;
(iii) own more than twenty but less than fifty residential properties;
(iv) own more than fifty but less than one hundred residential properties;
(v) own more than one hundred but less than one thousand residential properties;
(vi) own more than one thousand residential properties.".
I move amendment No. 11:
In page 21, between lines 28 and 29, to insert the following:
41. The Minister shall, by 1 December 2022, lay a report before both Houses of the Oireachtas which shall set out policy options or recommendations regarding the potential introduction of differential rates of local property tax on residential properties under this Act and the Principal Act where such properties are owned by persons who;
(a) own two or less residential properties;
(b) own more then two but less than twenty residential properties;
(c) own more than twenty but less than fifty residential properties;
(d) own more than fifty but less than one hundred residential properties;
(e) own more than one hundred but less than one thousand residential properties;
(f) own more than one thousand residential properties.".
When is it proposed to take Report Stage?
Is that agreed? Agreed.
When is it proposed to take Fifth Stage?
Is that agreed? Agreed.
As fewer than five Members have risen I declare the question carried. In accordance with Standing Order 61 the names of the Senators dissenting will be recorded in the Journal of the Proceedings of the Seanad.