Sunday 25 February 2018

Fair Deal blamed for empty homes scandal

No incentive to rent out houses when elderly move into care, says leading academic

Trinity assistant professor in economics Ronan Lyons Photo: David Conachy
Trinity assistant professor in economics Ronan Lyons Photo: David Conachy
Mark O'Regan

Mark O'Regan

The Fair Deal scheme and a property tax that is not high enough on empty homes are among the reasons why there are so many vacant houses in Ireland.

Trinity assistant professor in economics Ronan Lyons said these were among a number of trends now affecting the property market, and particularly the problem of vacant homes.

But he suggested that resolving such issues would not necessarily provide a "silver-bullet'' solution to the many vagaries affecting housing supply in Ireland.

"The solution to Ireland's vacant homes is not one silver bullet, but rather a host of smaller measures - ones that should only be taken when we have a full assessment of what is vacant and why,'' he added.

Under the Fair Deal arrangements, people who move into a nursing home have the majority of their disposable income taken to cover the cost of their care.

But Prof Lyons said this meant that they and their next-of-kin had no financial incentive to rent out their former home.

There are an estimated 25,000 people in nursing home care and a large number of those are covered by the Fair Deal scheme.

This 'catch-22' scenario may inadvertently be contributing to the high number of vacant family houses dotted around Ireland. Prof Lyons said another factor contributing to the number of vacant homes in many locations was the lack of a more comprehensive property tax.

In most other developed countries, this tax means there is a reduced incentive to retain an empty house indefinitely.

One of the reasons people hang on to such properties could be the hope of making a capital gain by way of a sale in the longer term.

Prof Lyons suggested that a further complication in the Irish property market was the legal and conveyancing system. In Ireland, the typical amount of time taken to finalise a sale is around twice that in England. There can be further, extensive delays if there are any issues around title and ownership.

The process can be complicated if probate is involved - as is the case when there is an executor's sale.

Meanwhile, under-staffing in the Dublin Probate Office means that many homes are lying vacant for longer periods than necessary.

Prof Lyons said this year's Census revealed that there were almost 260,000 homes vacant around the country - representing almost 15pc of the total housing stock.

In rural areas, an average of one in five properties is vacant, while in the rural parts of some counties, such as Kerry and Limerick, the figure is almost one in three. But even in towns and cities, more than 10pc of homes are vacant, with the figure smallest in and around Dublin.

"Given the acute shortage of housing that has emerged over the past five years, it is surprising that roughly 15pc of urban homes in Waterford, Carlow and Galway lie empty," Prof Lyons added.

Sunday Independent

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