Fianna Fáil Spokesperson on Housing, Planning and Local Government Barry Cowen TD says the Government is showing little interest in tackling land hoarding by large investors.
Deputy Cowen added that the decision taken by former Finance Minister Michael Noonan in 2012 to grant a Capital Gains Tax exemption to investors who brought prior to the end of December 2014, and held the property for seven years, has led to significant land hoarding.
“The decision taken by former Minister Noonan in 2012 is still reverberating throughout the property market and is holding back the disposal of sites for the development of affordable housing. The Capital Gains Tax exemption introduced in Budget 2012 for large investors is still actively encouraging the hoarding of land,” explained Deputy Cowen.
“The original purpose of the exemption was to encourage large scale foreign investors into the property market and many bought empty sites at knock down rates between 2012 and 2014. However the scheme was short-sighted and poorly designed as it created an incentive for investors to retain sites for 7 years, even if they did not intend on developing them.
“Most investors have an incentive to sit on these vacant sites while they appreciate in value until the end of the 7 year period when they can claim their capital gains exemption. The earliest date that properties acquired in the relevant period can qualify for the exemption is 7th December 2018.
“NAMA Chief Executive, Brendan McDonagh, has confirmed the impact of this poorly designed tax exemption on encouraging land hoarding. While the agency has sold land that could be used to build 50,000 homes, so far only 3,000 are under construction on these lands.
“Land Hoarding is clearly holding back supply. Fewer than 18,000 new units will be built this year, including just 4,000 apartments, when we need in region of 50,000 to make a dent on affordability, rent and price inflation.
“I am calling on the Government to reduce the holding period on these sites to four years, which will allow investors the opportunity to sell these sites now rather than in 2018, 2019 and 2020.
“I also strongly believe that a new Site Tax is required to encourage the use of empty sites. The Government’s Vacant Site Levy, which will not take effect until Jan 2019, is nowhere near strong enough to discourage land hoarding in a growing market. It is ineffective and full of loopholes designed to enable its avoidance by vulture funds.”