The level of derelict, unused and underused buildings in Ireland has been an issue of commentary and criticism for many years. Under the now defunct Rebuilding Ireland plan, utilisation of existing stock was one of the five pillars upon which that strategy was pinned. Several well-targeted incentives and initiatives were put in place, however, none resulted in the return of usable homes to the market en-mass. One of the more successful initiatives resulted in approximately 300 homes being brought back into use, which is better than nothing, but it is still only 10 percent of the target figure.
New data from a recent study by UK price comparison website money.co.uk found that Ireland currently has the 10th highest rate of vacant homes on the planet. The money.co.uk research found that 9.1 per cent of the State’s total housing stock is classified as ‘vacant’. In sheer numbers, this equates to 183,312 homes – excluding holiday homes or occasionally-used second properties. By way of comparison, 0.9 percent of housing stock in the UK is considered to be vacant.
The research included Organisation for Economic Co-operation and Development, or OECD, data and compared global homelessness (100 million people) with homes lying idle around the world. Globally, Japan has the highest vacancy rate, with 13.6 percent of its overall housing stock classified as vacant. The report attributes this, in part, to the ageing population, falling birth rates and Japan’s second-home tax regime, which acts as a deterrent for people to inherit relatives’ properties due to “hefty fees”. Cyprus has the highest level of vacancy in Europe, at 12.5 percent of the country’s total housing stock.
One of the most frustrating aspects of the report, as it relates to Ireland, is that our homeless population is 5,873 (at the time of this report), which means that just 3.2 percent of our empty homes would house every homeless person in the country.
This also means that 96.8 percent of the 183,312 vacant homes are potential opportunities, hiding in plain sight. Even if half of these are subject to planned future development (a generous assumption), there are tens of thousands of opportunities for would-be investors across the country.
Under Housing for All, the introduction of a vacant property tax was suggested, but not implemented – yet. The current position is that such a tax will be rolled out once data has been collected, likely over the next year. A focus on ‘why’ these homes are lying emptying will be important. For example, there will surely be exemptions or special consideration for homes owned by elderly people who are temporarily or permanently residing in residential care facilities. Anecdotally, this could be as high as 30 percent of all vacant homes nationwide.
The upshot is that homes lying idle serve no one. There are many reasons why these homes are not being lived in or offered to the rental market – policy implications and the law of unintended consequences comes to mind – but these reasons might weaken in the face of Revenue bills. It is not unrealistic to expect that, over the next few years, a significant chunk of these will become available for buyers and investors willing to put in the work needed.
Lotus Investment Group