Rory Hearne: Derelict and vacant property owners must use it or lose it 

Shortage of housing in this country is an artificial scarcity. There is an untapped supply of housing being hoarded by property owners, who allow it lie vacant or derelict. Policy half-measures will not suffice, it is time for action, writes Rory Hearne
Rory Hearne: Derelict and vacant property owners must use it or lose it 

A derelict property on Upper Cork Street, Mitchelstown, Co Cork which collapsed onto the street in July 2021. Picture: Larry Cummins

There is a building at the end of my street that was used as a fitness studio until 2010 but has been left vacant since then. 

It could be a home for a family. But it's not counted in official statistics as a vacant property, nor listed by Dublin City Council on the derelict register. It might be held by Nama, the banks, or the property owner might be just sitting on it. 

It is part of the hidden dereliction crisis; tens of thousands of derelict and vacant commercial buildings not included in official vacancy or derelict figures. It highlights the inadequate data on the scale of vacancy and dereliction and the absence of penalties on property owners.

The proposed grant for homebuyers purchasing vacant or derelict homes is welcome, but without incentivising and requiring property owners to sell or rent their property, the problem of vacancy and dereliction will continue. 

The grant could actually push up prices of the limited supply of derelict stock for sale. 

Without additional measures, property owners, not home buyers, will benefit.

The impact of the vacant grant support will also be dependent on an individual or couple’s ability to source a mortgage (will banks lend for these more complex home purchases?) and pay the cost of purchasing the derelict or vacant property, and to pay for refurbishment costs (which can be very substantial depending on the level of remedial work required). 

The grant beneficiaries are likely to be restricted to higher-income earners. But ultimately it is all dependent on whether the owner of the vacant and derelict property wants to sell. More is needed if we are to really unlock the potential of vacant and derelict property.

Derelict houses in St Mary's Park, Limerick. 
Derelict houses in St Mary's Park, Limerick. 

Up to this point there has been little political will at Government level to tackle this issue. There has been inadequate planning, coordination, and ultimately, funding and implementation. Whether local authorities wanted to address it or not, there was no real impetus, and little sign of sufficient funding and initiatives to tackle it. 

Thankfully it appears to be changing. Heightened public awareness is demanding action to turn derelict and vacant property into homes, particularly with half a million young adults living in their parents' house, and latest homelessness figures showing 2,548 children homeless with their families, a rise of 20% in just five months. There is a popular hashtag #DerelictIreland on Twitter where people across the country are posting images of derelict buildings in places like Cork, Kildare, Sligo, and Drogheda.

Government appears to be responding, at least at policy awareness level. Notably Fine Gael launched a new policy document in December dedicated specifically to vacant housing and renewal.

However, in order to systemically tackle the problem and avoid scenarios of home buyers with a new grant being fleeced by property owners, the State must act decisively and quickly. 

Firstly, disincentivise the holding of vacant property, effectively forcing property owners to sell.  Secondly, engage in the compulsory purchase and compulsory sale, of tens of thousands of vacant and derelict properties, and thirdly, fund the refurbishment of this property to become a large supply of affordable homes.

An effective vacant and derelict property tax is required to force the sale of the property by making it financially unviable to leave property vacant and derelict. 

The vacant property tax currently under discussion must be extended to include all property, with no exceptions, from derelict homes to commercial property also.

The tax should be 10% of market value. It needs to be punitive to force either the use of the property, or its sale. The revenue commissioners should collect the tax and scale it upwards as the period of vacancy lengthens.

The tax should create a flood of vacant and derelict homes on to the market to add substantially to the supply of property for home buyers and help reduce house prices.

The tax has the potential to raise up to €1bn a year, based on a conservative estimate of 100,000 vacant and derelict properties, valued at an average value of €100,000 per property. This revenue raised could be ringfenced into a fund targeted for a new state home building and retrofit company to purchase property, refurbish and retrofit it and then sell at genuinely affordable rates to home buyers and housing associations for social and cost rental homes. That would increase government investment in house building by 50%.

Homebuyers on average incomes cannot be left to take on the risk and cost of buying vacant and derelict properties alone. 

Current targets for local authorities to purchase just 2,500 vacant homes over the next five years is paltry. 

The State has the finance to procure at scale and then sell the homes at genuinely affordable prices to home buyers. Along with compulsory purchase orders, which can be expensive and cumbersome, the state should use compulsory sales orders set at 50% below market value. A state-building and retrofit company would provide an important construction capacity to undertake the refurbishment and retrofit, delivering in reasonable costs for home buyers.

Proper coordination among government departments and local authorities is required to tackle this, with financial support for purchase and refurbishment. It should dovetail with the retrofit programme. Bringing derelict and vacant property into use as homes that are zero carbon, is a vital way to ensure new home provision is climate proofed.

Rory Hearne is assistant professor in Social Policy Department of Applied Social Studies at Maynooth University
Rory Hearne is assistant professor in Social Policy Department of Applied Social Studies at Maynooth University

The minister for housing’s intention to set up a vacancy team in the Department of Housing is great, but if local authorities are under-resourced to purchase and refurbish stock, then it will be limited in what it can achieve.

Frank O'Connor and Jude Sherry made the point in this newspaper that a far more strategic and holistic approach is needed to end dereliction and bring vacancy down to acceptable levels. They propose innovative measures such as ‘mean while use’ and custodianship orders. 

Ali Harvey of the Heritage Council highlights that the collaborative town centre health check programme, which advocated for a town centres first policy in 2019, is demonstrating what can be achieved through collaboration across the public, private and civic sectors.

The shortage of housing in this country is an artificial scarcity. There is an untapped supply of housing being hoarded by property owners, who allow it lie vacant or derelict. Policy half-measures will not suffice, it is time for action. Owners of derelict and vacant property can no longer be allowed to leave it unused. Use it, or lose it.

Rory Hearne is assistant professor in Social Policy Department of Applied Social Studies at Maynooth University

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