The introduction of tax breaks to reduce the burden of capital gains tax on property owners could lead to the release of 100,000 derelict homes around the country, Pat Davitt from the Institue of Professional Auctioneers and Valuers (IPAV) has said.

Davitt was speaking in front of the Oireachtas Committee on Agriculture on Wednesday and said that the new Vacant Property Refurbishment Grant Scheme is of no use unless property owners are incentivised to sell old houses.

The other issue with the scheme, Davitt said, is the fact that the people who wish to buy such houses can't access a mortgage from the banks.

Davitt gave the example of a property originally valued at €20,000 which makes a capital gain of €80,000. At a standard rate of 33%, the owner would have to pay almost €30,000 in tax.

Encourage

"We have to look at something that is going to encourage the person that owns the property to sell it, because a lot of people have these properties, but won't sell them. The reason they won't sell them is because they're caught with the tax.

"Then, if we look at the purchaser, but when they go to the bank and want to buy the property, the banks say that there's no services in this property and until such time that these are put in place, the banks will not mortgage the property.

The grants are fine and they're good, but they're not much good to someone if they can't buy the property

"And then we look at the grants that are there at the moment, the grants are fine and they're good, but they're not much good to someone if they can't buy the property.

"If you can't get the owner to sell the property and the person that wants to buy it can't get the money, the grant is not achievable," he said.

Davitt has called on the Government to amend the 2022 act of the Credit Unions to allow them to give a bridging loan to the purchaser until they get their grants and can turn it into a mortgage of 20 or 25 years.

IFA response

Irish Farmers' Association (IFA) deputy president Brian Rushe said that houses that already exist must be fully used and a specific policy needs to be in place to tackle the blight of vacancy and dereliction, which is a feature of many villages and communities in rural Ireland.

“While it might not contribute the most significant quantum of development, it should be possible to bring much needed vacant houses on to the market in locations that will make an impact on housing needs in many towns and villages,” he said.