Sociologist says tax homeowners for empty rooms

The housing shortage could be eased by a property tax regime which penalised homeowners with empty rooms, a senior sociologist has suggested.

Dr Tony Fahey of the Economic and Social Research Institute said the lack of such a tax was contributing to the current crisis by giving no incentive to people to trade down from houses too big for their needs.

Dr Fahey acknowledged the emotive nature of the issue, but suggested Ireland was completely out of step with practice abroad, where it was the norm for homeowners to trade down when, in the typical example, their families were raised.

"People get very emotional about this because they think in terms of an 80-year-old lady who's lived in the same house all her life being taxed out of it. But it's common, in the US for instance, when families grow up and you have an empty nest, for parents to move into something smaller. They expect to do it and they plan accordingly."

He admitted there had been an angry response after he suggested the idea on Radio 1's Morning Ireland yesterday. "People were outraged. One person who rang me compared it to euthanasia and another person suggested, `Why don't you just take old people out and shoot them?' " In fact, old people who wanted to stay where they were could be protected by "rolling up" the tax, which could be paid after they died from the proceeds of the property or by the heirs, he said.

By contrast with other countries, there was "very little housing mobility after midlife" in Ireland. "People are encouraged to stay where they are by the tax system. They save in the form of property, but in the meantime you can't realise those savings. People may be asset-rich but living on very small incomes, and unable to maintain the houses they're living in."

However, Dr Fahey conceded that a property tax was probably not feasible politically. Once a tax was abolished it was very hard to reinstate, he said, and it was a matter of regret that the old rates system was scrapped rather than reformed in 1977.

"Before that, until it was phased out in the 1960s, you had income tax on homeownership. They calculated how much it would cost you to rent the property you owned and the money you were `saving' was treated as income and taxed accordingly."