Amnesty proposed for derelict properties

A novel tax amnesty scheme to help owners either sell or redevelop derelict properties has been proposed by a Mayo councillor.

Castlebar-based Independent Cllr Harry Barrett called on fellow members of Mayo County Council's housing strategic policy committee (SPC) to support an amnesty on derelict properties. He said Mayo has one of the highest rates of dereliction in the country and needs to lead the way on this issue.

 “Let us be the council that asks for a pilot scheme to deal with dereliction. I am calling for a dereliction amnesty, and a two-prong strategy, that will provide both an incentive for owners to sell and also make redevelopment highly profitable.

“I propose we give people an 18-month window to sell their derelict properties without paying capital gains tax. This approach mirrors previous successful tax amnesties, offering a financial exit strategy rather than punitive measures. 

"In regard to refurbishment, we should also make it profitable to do renovations, i.e. make them 100% tax deductible against purchase costs and construction costs. Owner-occupiers should also benefit from fully tax-deductible mortgages over 20 years, significantly reducing their financial burden. This way, you are incentivising owners to get involved, the owner is getting a tax break, the person buying it is also, and that would fill all the empty units over the shops in town and get them renovated immediately.” 

Cllr Barrett’s proposed scheme did include some conditions.

“If owners fail to act within a short time-frame such as one fiscal year, the Government should CPO the property at a reduced price, with all costs borne by the owner. A public register of delinquent owners should be created to name and shame those who let properties remain derelict.” 

The council's senior architect Simon Wall said the big issue in regard to dereliction was the cost of refurbishment.

"It is often greater than the sale price of a derelict property when finished."

He agreed wholeheartedly with Cllr Barrett’s proposal and recalled the success of the Section 23 Special Tax Relief Scheme implemented in Westport, saying: “Tax breaks, if structured correctly, work very well. The Section 23 was one of the first such schemes, but it was blanket and not focussed as it should have been. However, it drove out a lot of the dereliction in the town and got a lot of people into the centre as well. 

"I think the council could target dereliction in town centres, because so much of a development goes to the tax man, and it’s the economics that are creating dereliction in town centres really, but a targeted dereliction scheme, across the nation actually, would be good.” 

Mr Wall also pointed out that the council is currently working on housing developments in Ballinrobe town centre for three mid-terrace sites that they are splitting them into one, two or three-bed units, for which the complexities around regulations were driving up the cost.

“Refurbishment costs for those three make that type of project not attractive for the private sector and the State seems to be the only show in town for refurbishment of such properties in our towns.” 

Fine Gael Cllr Neil Cruise supported the amnesty proposal for derelict houses, suggesting it should also be applied to developing social and affordable housing, and adding it was not just tax incentives that were needed but also a simplifying of building regulations.

“As you drive through smaller towns you may see lights on in the ground floor of properties but you won’t see anything upstairs. It is a nightmare dealing with the building regulations, especially the fire regulations, which could cost you €40,000 to €60,000 straight away just to bring them up to the required standard.” 

Cllr Cruise said there was complexity in the issue because there could be door openings on different levels with maybe one onto the main street, all of which must fulfil building regulations, adding: “It’s a shame to have that number of real estate and nothing happening with it.” 

He said the SPC should call for the grants around vacant and derelict homes to be revised “upwards”, saying: “While the current scheme is very successful, the grants of €50,000 and €70,000 are a little bit behind the times with regard to prices people are paying for work and properties and they are also inclusive of VAT which can be 23%. I think €100,000 and €120,000 grants for vacant and derelict house refurbishments would be more reasonable for getting a unit back into play and that isn’t adding a footprint to the countryside.” 

Independent Cllr Michael Kilcoyne said a problem with the current system is that grants are not paid until the money is spent on refurbishment “and many people after buying a derelict house don’t have the money to spend on it even if it could be paid in phases".

SPC chairperson Fine Gael Cllr Peter Flynn said there had at least been some progress on the issue through the government allowing the council to buy derelict properties and flip them, which was being done in an average turnaround of 12 months where an owner does not move on it.

“Preferably we will work with the owner to turn it around, just so that the property is being activated but where there is a CPO, the advantage is it eliminates all ownership issues and gives it free title.” 

He said Cllr Barrett’s proposed amnesty could be forwarded for consideration to a full meeting of Mayo County Council, with Cllr Barrett commenting: “Amnesties do work, and it behoves us as a council to put this forward. It is morally reprehensible to have this level of dereliction when there is a housing crisis. Let’s ask for this scheme because we are the county that is most badly affected by dereliction and we have said this is a solutions-based SPC. So let us ask the Minister to do this and put it before Mayo County Council.”