At a time of great shortages in housing and soaring rents, decisive action is needed once and for all to combat empty and dilapidated buildings, says Kyran Fitzgerald.
It is one of the great paradoxes.
Irish urban housing lists are greater than ever, rents and purchase prices soar beyond the reach of all but the financially fortunate. Yet across towns and cities, large numbers of residential and commercial properties lie vacant.
Recent data estimates 230,000 empty homes in Ireland, many in areas of economic decline, or where tax drive development resulted in huge oversupply.
But in Dublin, where housing demand is buoyant, and over 130,000 are on housing waiting lists, at least 20,000 homes are said to lie empty. These unused assets help drag down the appearance of neighbourhoods, exposing residents to unnecessary risk while devaluing nearby properties.
Green Party councillor, Ciarán Cuffe, a former housing minister, is calling for appropriate measures aimed at tackling the problem. He suggests many empty properties are in the hands of investors holding on to them in the hope of eventually making some not so quick bucks. He has proposed the adoption of a ‘carrot and stick’ approach by the authorities.
On one hand, development contribution levies could be lowered. On the other, a levy on the market value of the vacant properties or sites, would be introduced and enforced.
The levy would rise on an annual basis depending on the length of time the property is left empty to a maximum of 6%. Using such an approach, the owner would be left with no option but either develop, or sell the property on.
The authorities have in fact been taking measures to tackle the problem. But how effective will they turn out to be?
In July 2015, the Urban Regeneration and Housing Act was passed. Its intended purpose was to spur developers and landowners through penalties and incentives to develop land zoned for residential use. The act proposed the introduction of a 3% levy payable from 2019.
Tom O’Byrne, of solicitors O’Flynn Exhams, has warned problems could arise when it comes to determining a site market value. The act provides for an estimate of open market value based on an unencumbered freehold title. Anyone with a passing familiarity with the law knows there are problems with the title to many properties.
He points out no allowance is made in the legislation for the financial position of the landowner or developer, or for possible planning difficulties. A decision with regard to market value can be appealed to the Valuation Tribunal, or to the High Court on a point of law.
Large numbers of properties are mortgaged to the hilt and one suspects many vacant properties are owned by individuals, or controlling shareholders in companies, up to their neck in debt.
Much of that debt was run up during the boom and became unmanageable following the crash. The 2015 act provides for a reduction in the proposed levy to zero where the value of the mortgage, or other charge on the property exceeds the ‘market value’ of the property and for proportionate reductions where outstanding borrowings are estimated at less than full market value.
Where levies are left unpaid, they become a charge on the property in question, payable whenever it is put up for sale. It seems the levy haul could be a lot less than hoped for unless that piece of legislation is redrawn.
Even locating the owners of such properties can prove an uphill struggle, particularly for local bodies which may be struggling with manpower shortages.
Progress of sorts has taken place since the start of 2017, as local authorities have been required to keep a register of vacant properties. In some cases, properties have yet to be placed on the local register.
We’ve been here before. In 1990, the Derelict Sites Act was passed. It aimed at cracking down on those who left properties decline into a ruinous state. There is little evidence of active enforcement of the act.
The 2015 act applies to properties that are not derelict, but have been left unoccupied for lengthy periods. So a wider net is cast by the 2015 act, but will inertia on the part of officialdom once again be the order of the day?
We are constantly being told we are in the middle of a housing emergency, with thousands of children in short-term accommodation. Shortages of suitable accommodation act to scythe down living standards, boost inflation, discourage investment and spark a flight of skilled labour. They store up longer term social costs.
Yet supply is held back at a time of great demand by virtue of so many properties being left empty. In many cases, owners may be elderly, no longer in charge of their affairs or over-borrowed. Some are in the hands of financial institutions and vulture funds.
The Green Party has just introduced legislation proposing a levy of up to 6%. Ciarán Cuffe believes that compulsory purchase orders could be used more frequently in such situations.
The 2015 act contains three weaknesses — first, it applies only to individual properties of over 500 square metres, the equivalent of at least two large adjoining houses with gardens. Second, loans can be deducted — why should they be? In Cuffe’s view, over-borrowed owners should be encouraged to sell.
A third problem is the current 3% levy, even when eventually applied, is too low in an environment where land values are rising by double digits amounts at present.
In Germany, regional governments actually people to move in, as guardians, to empty properties.
Our constitution guarantees the citizen the right to own private property, and rights as owners, but these rights are not absolute. Those who allow property to lie idle trample not merely on the common good, but on the rights of affected neighbours. An empty house soon becomes a damaged house, and problems quickly spread.
This social sore has been allowed to fester for far too long and needs tackling. Failure to do so amounts to condoning waste at a time of real shortage.
But be in no doubt. Tracking down such owners and facing them down in the courts will be another challenge.
As ever, well-meant laws run the risk of falling down due to ineffectual enforcement. One wonders whether hard-stretched local governments are up to it. But is surely time they got to grips with an issue which will simply not go away.
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