PROPERTY tax rates could be frozen beyond 2019 because of the spiralling cost of homes, Taoiseach Leo Varadkar has indicated.
The market value of every house in the country is due to be reviewed by November 2019, with the inevitable effect that homeowners would be hit with a significantly higher Local Property Tax (LPT). Yesterday the Irish Inde
pendent revealed the housing crisis is causing the average semi-detached home to go up in value by €500 a week.
Homeowners are currently paying charges based on 2013 valuations as a result of a decision by Michael Noonan to freeze the tax two years ago.
Now Mr Varadkar has suggested he may be prepared to extend the price freeze rather than risk a backlash from middle Ireland.
“There has been a very significant increase in property values, particularly in the greater Dublin area, but not just in the Dublin area, but I certainly don’t envisage, nor do I want to see, a sudden dramatic hike in property tax, so we will be working hard to avoid that,” Mr Varadkar said.
Primarily the income from the LPT is retained by the local authorities to pay for infrastructure and services.
Currently each local authority has the power to alter the rates set by Government up or down by 15pc.
“My own local authority in Fingal has voted to alter it downwards, but only by 10pc instead of 15pc, because they want funds to spend on housing and homelessness,” Mr Varadkar said.
“So those are the sorts of decisions being made, and councils have the power to make those decisions.
“But one thing that has not increased, which we don’t want to see, and which I will do my might and main to avoid, is any sudden hike in property tax that would come about because of house revaluations”, he added.
His comments came as Housing Minister Eoghan Murphy said the prices of homes will continue to increase until the Government can address the supply issue.
The minister was reacting to the latest REA report, which revealed the prices of three bedroom semi-detached houses are now increasing at double the rate of last year.
Overall, the average house price across the country has risen by 11.2pc over the past 12 months.
In Dublin the average price of a three-bed semi-detached home has jumped in value by €17,000 in the three months to the end of September, and now costs an average of €431,500
The significant price increase is due to the low supply, and Mr Murphy has said this is unlikely to change in the near future.
“We know builders are building at the moment, they’re building houses, they’re building apartments, we need to get them to build more,” he said.
“We have ambitious plans, but until we get that proper supply online, prices are going to continue to increase,” he added.
The report indicated it will not be until 2020 that a more normal housing market is in place.
However, Mr Murphy said this has been the case for two decades.
“We’ve had a dysfunctional housing market in this country for at least 20 years.
“We had to bring in incentives in 1997 because there weren’t enough houses being built in the right areas,” he said. “Next year we’ll build 20,000 homes – private and public homes.
“That’s a conservative estimate.
“We should be building 25,000 a year, so we’re getting there, we are making progress every year, we’ve got to build and that’s what we’re doing,” he added.
Mr Murphy was speaking at the Charlemont Street Regeneration Project in Dublin.
The latest regeneration, which has been in the works since 2007, will see an initial 79 social housing apartments ready in the coming weeks.
All remaining residents of Tom Kelly Road flats, some of whom have been there since its opening in 1969, will be accommodated.