Latest: Freezing property tax 'may cause problems for future house buyers'

Latest: Freezing property tax 'may cause problems for future house buyers'

Update - 10.35am: Experts are warning that freezing property tax could discredit the whole system.

It follows a pledge by the Taoiseach Leo Varadkar to work "might and main" to avoid a rise, but he has stopped short of promising to keep taxes at their current levels.

However, it is predicted he could try to slow the rate of increase accompanying soaring house prices.

Director of, Donal de Buitléir, says it will cause problems for future house buyers.

He said: "They will be asked what was the value of this house, or would have been the value of this house in 2013. And we know this from what happened with the ratings system in the 1970s.

"The valuations could become completely out of line, the system could become completely discredited and public confidence in it goes."

Earlier: The Taoiseach Leo Varadkar has come out against a dramatic rise in property tax.

Prices are expected to go up in line with soaring house prices, but Mr Varadkar says he will work "might and main to avoid" a big increase.

Yesterday it was revealed that an average semi-detached house is becoming €500 more expensive to buy each week.

Also the cost of renting in some Dublin suburbs is now double the cost of a mortgage.

Mr Varadkar said there would be no sudden hikes in property tax rates despite spiralling house price values, particularly in urban areas like Dublin and Cork.

“One thing that has not increased, which we don’t want to see, and which we will do might and main to avoid, is any sudden hike in property tax that would come about because of house revaluations,” he said.

“There has been a very significant increase in property values, particularly in the greater Dublin area, but not just in the Dublin area, but I certainly don’t envisage, nor do I want to see, a sudden dramatic hike in property tax so we will be working hard to avoid that.”

While many councils said they would like to reduce the LPT, they maintained they could not as a cut in income would result in a reduction in services.

“Local councils have the power to vary local property tax up and down by 15%,” said Mr Varadkar.

“My own local authority in Fingal has voted to alter it downwards, but only by 10% instead of 15% because they want funds to spend on housing and homelessness.”

For homes worth €300,000 to €350,000, owners will pay annual property tax of €585, while homes valued between €400,000 and €450,000 face a charge of €765 a year.

It emerged yesterday that the average three-bed semi-detached house nationally has risen by 3.1% to €221,843 since June, as the housing crisis continues to grow.

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