Is a reduction in Capital Gains Tax the answer to current housing crisis?

The latest housing and mortgage figures from various sources released in recent months reiterated what we already know, there are not enough houses for sale to meet demand at present.

Just this week it emerged that mortgage approvals were up 62% in the first three months of 2017 compared with the same period of last year. However, the number of loans actually drawn down was up just 27.4% year-on-year, suggesting that those with money to spend on property are finding it difficult to find somewhere that suits their needs.

The rising cost of rents mean that for many people who can afford to, it now makes more sense to buy.

That’s all well and good when you can’t find somewhere to purchase though. This lack of supply is driving prices upwards and predicted increases of up to 10% in prices this year has been a key contributor to those claiming we have a crisis in housing at present.

Many Government moves to solve the matter up until now have proved unsuccessful.

This week Fianna Fáil put forward a suggest which they feel could solve the housing crisis “immediately” though.

Senator Aidan Davitt wrote to Minister for Housing Simon Coveney to suggests changing the Capital Gains Tax rate to encourage those in possession of the 250,000 vacant properties in Ireland to put them on the market.

Mr Davitt said: “We know from CSO statistics that there are in the region of 250,000 vacant houses in the country.

“I propose that the Government reduce Capital Gains Tax on the quarter of a million houses that are vacant from 33% to 10% for a one year basis.”

He has predicted that “going on previous examples of reductions in CGT, that an extra 10,000 to 15,000 vendors would take advantage of this opportunity and sell their properties.”

The Westmeath senator believes that by placing a clear time frame of one or two years on the tax cut, property owners would be encouraged to move quickly and sell vacant homes.

Mr Davitt, who is also an auctioneer, said: “This would be a major rapid response to the housing crisis.

“I would add that the units in question had to be vacant for the previous two years so it would not affect existing tenants.”