Local Property Tax, a different approach discouraging land hoarding.

Voluntary

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The current Local Property Tax encourages speculative land hoarding, so what are some other options?

Let's look at the property tax in Poland:

Taxable:
- land
- buildings
- buildings or their parts used for business

Excluded:
- lands classified as farming lands, forests
- lands used for public roads
- lands used by county councils, schools, hospitals etc

Tax base:
- local councils set the local property tax rates each year per square meter, however these can't exceed the maximum national rates
- residential buildings: tax per square meter of the usable area (house, apartment)
- residential land: per square meter

House owners pay a sum of the tax calculated for the building usable area + for the land.
Apartment owners pay significantly less of land tax, as they share the land with other apartment owners living on different levels (so if you occupy 50 m2 and one story of 5 stories apt, then you pay for 50 m2 building tax + 1/5 *50 of land tax - more levels - less land tax per unit)

The rates are relatively low, but the tax base is large.
Yearly max rates are currently set as:
- 22 euro cent per sq. meter of residential building usable area and 11 euro cent per square meter for residential land.
so the residential land is taxed eg half what the residential buildings are.


So now translating this into Ireland's reality, let's say the max tax rates would be quadrupled, so max 88 cent per sq meter of residential building usable area + 44 cent per square meter of zoned and residential land.

Medium sized apartment @70 square meter in Dublin (max rates) tax would be below 100 euro per year.
Large 150 square meter detached house on 800 square meter land would imply tax in amount 150*0.88 + 800*0.44 = 132 + 352 = 484 euro per year

Zoned residential land tax: up to 440 euro per 1000 square meters depending on location. This is enough land to build 2 detached houses with gardens or 1 apartment block.

These would be the maximum rates, so I guess in the capital. Local authorities would set their local rates respectively.


Advantages:
- discouraged speculative land hoarding, holding to land which doesn't make revenue costs money
- encourages living in apartments, as the LPT for apartments works out lower
- encourages buying smaller housing on smaller plots of lands. Larger house - higher tax, larger plot of land - higher tax.

Disadvantages:
- Tax not directly linked with property value. High end properties may imply the same amount of property tax as cheaper accommodation in the same are (tax rates however differ by areas). This is nothing we don't know already, as for example motor tax is neither based on the value, but on emissions level.
 


Orbit v2

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Tax is a blunt instrument for solving the housing crisis. If hoarding is the problem then the state could CPO whatever sites it needs using existing powers, and contract builders to design and build the houses. Why isn't the state doing that?
 

Disillusioned democrat

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Tax is a blunt instrument for solving the housing crisis. If hoarding is the problem then the state could CPO whatever sites it needs using existing powers, and contract builders to design and build the houses. Why isn't the state doing that?
Eh, because the "state" has little or no interest in solving the housing crisis...or housing opportunity as their cronies call it.

Just look at every action the now FF supported FG government have done - increase HAP, give first time buyer grants, NAMA sales to REITs, etc., all about demand and high prices, not driving supply because, well that would reduce prices.

The "state" is obsessed with high property prices, not affordable homes.
 

Orbit v2

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Eh, because the "state" has little or no interest in solving the housing crisis...or housing opportunity as their cronies call it.

Just look at every action the now FF supported FG government have done - increase HAP, give first time buyer grants, NAMA sales to REITs, etc., all about demand and high prices, not driving supply because, well that would reduce prices.

The "state" is obsessed with high property prices, not affordable homes.
They've certainly bought into the line from developers that they can't make a profit without supports like the ones you mentioned. That's not the same thing as wanting high property prices per-se though. Personally, I think Coveney would like to solve the problem. Ever rising house prices is not good for anyone long term.
 

Spanner Island

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Basing the LPT on 'value' as opposed to square footage was always going to encourage the kind of mindless and ludicrous property orgy we had less than a decade ago... and nothing has changed.

imo... there should have been two rates - urban and rural and they should all have been based on square footage and not value.

The argument at the time was that the state needed a stable base LPT which square footage would have been... and certainly much more stable than value due to the fact that the size of a property is generally going to be a lot more constant than the feckin' value of it.

But sure f*** it.

Irish people have proven over decades that we are sick and addicted when it comes to property and that we don't seem to have the slightest interest in any cure.

I'm beyond f***ed off listening to endless sh!te about property.

I was hoping the tedious property borefest that preceded the crash was gone for good... but nah... doesn't look like it... unfortunately.
 

Disillusioned democrat

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They've certainly bought into the line from developers that they can't make a profit without supports like the ones you mentioned. That's not the same thing as wanting high property prices per-se though. Personally, I think Coveney would like to solve the problem. Ever rising house prices is not good for anyone long term.
It's good for developers and landlords.

40% of TDs declared an interest in "property" either as owners, developers or landlords - with our track record in compliance I imagine the real level is higher - you know, TDs married to spouses who are landlords, the easy stuff to miss.

Ergo 40%+ of TDs have an interest in, and control over, the price of housing.
 

Orbit v2

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It's good for developers and landlords.

40% of TDs declared an interest in "property" either as owners, developers or landlords - with our track record in compliance I imagine the real level is higher - you know, TDs married to spouses who are landlords, the easy stuff to miss.

Ergo 40%+ of TDs have an interest in, and control over, the price of housing.
It's really hard to argue against that, considering how passive and inert these people have actually been with respect to a problem that everyone has known was developing for around ten years. You can be cynical like that, and in the interests of fairness you can also point to TDs from the left and right who have objected to house building in their own constituencies.Most TDs aren't stupid though, and while they might not want to see another crash, neither do they want to see widescale social problems developing out of the housing crisis.
 

clearmurk

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Tax is a blunt instrument for solving the housing crisis. If hoarding is the problem then the state could CPO whatever sites it needs using existing powers, and contract builders to design and build the houses. Why isn't the state doing that?
In the UK, it seems that the majority of land is being hoarded by 6 or 7 large companies.

Does anyone know if a similar situation pertains here?
 

wexfordman

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Basing the LPT on 'value' as opposed to square footage was always going to encourage the kind of mindless and ludicrous property orgy we had less than a decade ago... and nothing has changed.

imo... there should have been two rates - urban and rural and they should all have been based on square footage and not value.

The argument at the time was that the state needed a stable base LPT which square footage would have been... and certainly much more stable than value due to the fact that the size of a property is generally going to be a lot more constant than the feckin' value of it.

But sure f*** it.

Irish people have proven over decades that we are sick and addicted when it comes to property and that we don't seem to have the slightest interest in any cure.

I'm beyond f***ed off listening to endless sh!te about property.

I was hoping the tedious property borefest that preceded the crash was gone for good... but nah... doesn't look like it... unfortunately.
I dont get why this needs to be so complicated. We all know that value based property tax is completely unfair, is a blunt instrument, and causes ghetoisation in the long term, apart from the fgact, as many have said, the higher the property market, the more tax the government takes, which is a very dangerous partnership.

Square area, is also too arbitory, and has little to do with the tax you are paying, in that it bears no relationship to the cost of delviering services.

The simplest implementation is a poll tax, based on cost of delivery of services. If three people live in a house, three people avail of services, and three people pay for those services...how does that not make sense ?
 

Voluntary

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I dont get why this needs to be so complicated. We all know that value based property tax is completely unfair, is a blunt instrument, and causes ghetoisation in the long term, apart from the fgact, as many have said, the higher the property market, the more tax the government takes, which is a very dangerous partnership.

Square area, is also too arbitory, and has little to do with the tax you are paying, in that it bears no relationship to the cost of delviering services.

The simplest implementation is a poll tax, based on cost of delivery of services. If three people live in a house, three people avail of services, and three people pay for those services...how does that not make sense ?
Tax per square area encourages to build apartments and to build high rise.
Tax rates would differ by area as would be set by local authorities on local levels, so if you live in let's say Limerick you'd pay considerably lower tax than if you live in Dublin etc.
 

Orbit v2

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In the UK, it seems that the majority of land is being hoarded by 6 or 7 large companies.

Does anyone know if a similar situation pertains here?
It is claimed that most development land in the Dublin area is owned by around 5-6 developers. I'm sceptical of these hoarding claims as a way of easily passing the buck. In this country, we lean on so-called property rights in the constitution as the crutch (despite the constitution and case law clearly allowing for the "exigencies of the public good"). But, the UK doesn't even have a constitution. So, the point I'm making is completely undeniable over there. I suspect the big problem in the UK is nimbyism, as it is here to an extent. Everyone wants to see houses getting built until they have one themselves. Then it's all about green-space, traffic problems, etc.
 

Watcher2

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Tax is a blunt instrument for solving the housing crisis. If hoarding is the problem then the state could CPO whatever sites it needs using existing powers, and contract builders to design and build the houses. Why isn't the state doing that?
One reason might be that the state is not in the business of building houses. I know the populist mantra "build social houses" but what we really need, to tackle the house price issue) are houses for sale rather than social housing. Those on the social housing list are not exactly the type of customer that house prices really affect.
 

Watcher2

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They've certainly bought into the line from developers that they can't make a profit without supports like the ones you mentioned. That's not the same thing as wanting high property prices per-se though. Personally, I think Coveney would like to solve the problem. Ever rising house prices is not good for anyone long term.
Then Coveney would have solved it. He is the Minister in charge. He is the one with the power to ease the problem. He can make the laws.
 

Orbit v2

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One reason might be that the state is not in the business of building houses. I know the populist mantra "build social houses" but what we really need, to tackle the house price issue) are houses for sale rather than social housing. Those on the social housing list are not exactly the type of customer that house prices really affect.
Well, the state is heavily involved in the process through the planning system, but what we're talking about here is specifically hoarding. If it exists, hoarding could be fixed through a process of CPO and then even just auctioning sites on with a legal commitment to build. The state would not be actually building anything necessarily.
 


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