From: Diarmuid Murphy
Sent: 04 February 2009 17:04
To: Commission on Taxation Info
Subject: Proposed Tax on second homes

Dear Sirs,

I hope you will read my note below on the proposed tax on second homes.
In my note I refer in particular to what was traditionally second homes
- holiday homes - as opposed to investment properties.

In towns all over the eastern, southern and western seaboard where there is a proliferation of holiday homes the sales market and also the letting market has totally stagnated in recent years to a far greater extent than urban areas. To examine this in detail a person only has to look at the Daft website to see the number of houses for sale in these areas. Whilst the Daft website is not 100% accurate it is as close as you are going to get to detailed figures on numbers of houses for sale.
Of course some houses will appear twice on the site (where with different estate agents) but against that an  estate of say 30 new houses will only appear as one house. Kenmare and Dingle (Kerry) has 237 and 200 houses for sale respectively, Rosslare in Wexford 102. Compare this with Tallaght 246 and Swords 257. Gorey (including resorts of Riverchapel and Courtown) has over 800! I am familiar with the Kenmare and Rosslare market and can tell you that the overhang of numbers at this moment would represent about five years of sales in a healthy market. It is clear from these figures that people in these holiday areas are already desperate to sell. Any proposed tax could be disastrous and lead to a further crash in these areas that could permeate out into many other areas or to the whole country.  

For a number of reasons, partly tax relief, both the number of houses and the price rose significantly in areas like Kenmare. The time, surely to bring in such a tax would have been about five years ago to slow down the market. To do so now could have a severe effect on the asset value of all homes in these areas including principle residences of people living full time in these areas. 

Whether the tax is brought in on holiday homes or all properties other than principal private residences will be disastrous for areas on the coast. Some would say that the fall out could result in a readjustment of prices in these areas which would be good for the indigenous population of these areas but I am not sure that is fair to the hundreds of owners/sellers desperate to get rid of houses in these areas. Much will obviously depend on the rate at which such a tax is levied - the recent budget figure of €200 did not effect the situation to any great extent.

If the tax is brought in on holiday homes only it would also have an adverse reaction in that those wwho do not use their holiday home on a regular basis may decide to rent it at any price to avoid the tax thereby upsetting any equilibrium on the local letting market.

I would be obliged for an acknowledgment of the above. I am writing to you in a personal capacity.

Thank you for your time,
Diarmuid Murphy,

          
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