Vacant properties throughout Ireland: Learning from Denmark
At Space Engagers, we welcome Minister Murphy’s outline key actions to utilise vacant houses that were announced Monday 14th Aug, and we look forward to the Government’s forthcoming Vacant Homes Strategy (Housing Gov. 2017). The outline key actions include:
- A dedicated empty-homes unit
- Vacant-homes officers
- An online log of vacant homes
- Faster turnaround of vacant social housing stock
- Quick enactment of exemptions for converting vacant commercial units
- Supporting the conversion of over-the-shop premises into homes.
While these are obviously important steps forward we believe that there are also broader, underlying and systemic factors that must be addressed.
I came across Space Engagers while collaborating with them on a community mapping project in Aarhus in early 2017. Visiting them in Dublin in March I got an even better insight in their interesting work and eventually I joined them as their intern during the summer. This blog post will briefly discuss 3 systemic factors that illustrate how the Irish property system differs from the Danish system, in an attempt to understand why Denmark has fewer vacant houses compared to Ireland.
To illustrate the difference between the two countries we find that Dublin has approximately 9% vacancy with over 36,000 vacant homes (CSO 2016) and Copenhagen has 3.5% vacancy with about 21,770 vacant homes (Danmarks Statistik/Dansk Byggeri 2016).
Denmark has several registration and tax systems to minimise the amount of vacancy and dereliction. 3 factors are set out below that may be interesting to consider in relation to Ireland.
1. In Denmark property information is online and free
One of the major hurdles in addressing vacant properties in Ireland is the lack of information on ownership. Ireland’s Land Registry is still incomplete and there is a charge for a query on every individual property.
In Denmark a digital registration is needed to secure ownership rights and all pre-digital data has been inputted to create a complete database of property ownership. The easy-to-use online database, www.tinglysningen.dk, shows you core data for a specific property. So by entering an address you will see who owns the property, property/land value, plot identifier, mortgage details and other information. For example, if you enter the address of Rosenborg Castle located in central Copenhagen we find out that it is owned by “The Agency for Culture and Palaces” and that it has an easement due to being a listed property.* Information on a property can then be taken to the Danish Geodata Agency website (https://sdfekort.dk) where a map will identify the plot number and outline an area as per the pictures below.
Furthermore, Denmark has a public information server, www.ois.dk, operated by the Danish Customs and Tax Administration, SKAT, which gathers property data from all registration systems and includes maps, plot information, a property conditions report etc..
* To secure the information available to the database only limited information is given without log-in. By using the Danish log-in system NemID full information is provided.
An open, complete and free Land Registry in Ireland would have significant economic, social and environmental benefits, for example helping local government and community groups identify owners of spare land for house building or community benefit. We are currently working on a vacant homes app with The Peter McVerry Trust. They are finding the process of finding owners of a piece of land or property very resource intensive, and often impossible.
An open, complete and free Land Registry would also help engender a cultural shift where it is considered irresponsible not to use property efficiently. It would not be so easy for property owners to hide from public view. This is a very current debate in the UK, where the campaign “Who Owns England” is advocating for an open land registry. A letter was recently submitted to the UK Government that sets out good reasons for making information on ownership transparent. Supporters of this letter were, among others, the CEO of Friends of the Earth, the CEO of the Royal Town Planning Institute, and the Executive Director of the New Economics Foundation (http://bit.ly/2x7gyLA).
2. Denmark has a land value tax that disincentivises land hoarding
In Ireland property owners pay a property tax, so the higher the value of your property (the more you invest in it) the higher your taxes are. In Ireland there is no tax on the value of the land, only the improvements (buildings) on it. A vacant site therefore incurs no tax obligations, although sites over 0.05 hectares (500sq.m) will be subject to the new vacant sites levy (with many exemptions and reductions) from 2019.
However, a land value tax is a very old idea. A mild form was introduced by the 1910 Finance Act, which included an undeveloped land duty (equivalent to the Vacant Sites Levy) and an incremental land duty (to tax the unearned increment in value on land left unused — to tackle land hoarding). It never really got a chance to become operational in Ireland due to national and international events. More recently the land value tax was advocated by the Green Party and www.feasta.org in 2012 (see their publication “The Fair Tax”, Emer Ò Siochrú ed.), and recommended by the Economic and Social Research Institute (ESRI) in 2015 (Irish Times by Arthur Beesley, Dec. 18th). Both references the Danish system.
In Denmark, property owners pay both a land value tax to the local municipality, and a property value tax to the State (SKAT, N.D.). The rate of the land value tax is determined by the county you live in but ranges from between 1.6 to 3.4 percent of the land value, which is published in the registration system (SKAT, Ejendomsværdiskat og ejendomsskat N.D). The land value tax goes towards the cost of maintaining the public sector in Denmark.
Because there is no taxation on land in Ireland, there is no penalty for leaving land vacant. A land value tax would incentivise using vacant lands suitable for property development and ultimately support a functioning real estate market. The book “The Fair Tax”, mentioned above, clearly explains the real advantages of a land value tax over a conventional property tax and convincingly shows how easy it would be to assess and implement.
3. In Denmark it is illegal to leave a property vacant for longer than 180 days
In Ireland there is no obligation to actually use a property as this is considered a private matter or right enshrined in the Constitution. The social responsibilities and impacts of property ownership are not recognised.
In Denmark a complex system for property ownership and use effectively ensures that no home is vacant for longer than 180 days a year (Boligejer, Bopælspligt 2016). As a property owner you are therefore obligated to either live there yourself or rent it out as a permanent residence.
There are many aspects to the Danish system. For example:
- Recognised holiday homes which may only be used as a residence during the summer are exempt and therefore can be used for less than 180 days;
- If a property is up for sale or rent, it is not subject to the 180 days rule;
- Municipalities are entitled to make exceptions so as permanent residences in some areas can be used as holiday homes to avoid depopulation and decay;
- There are restrictions on non-nationals buying property: a prospective purchaser must have been a permanent resident in the country at the time of buying or have previously been living in the country for a total of 5 years (Boligejer, At købe bolig I Danmark).
The residency requirement act was implemented in order to avoid depopulation of rural districts, to counteract formation of districts with holiday homes intended for permanent residence, and to prevent unimpeded speculations in the real estate market. If the residency requirements aren’t being respected the municipality will assign a tenant to the property or ultimately force the owner to rent the property (Legal Desk, Bopælspligt).
To further assist this, the Danish Government set up a regeneration fund as part of a national growth plan to support rural areas and villages in restoring or demolishing vacant and derelict properties. In 2014–2015 the new fund was 400 mio. DKR. (Approx €54m) and divided among 66 municipalities. A new fund has been set up for 2016–2020. The fund only applies to villages with less than 3000 inhabitants and in rural districts (Erhvervsstyrelsen, Pulje til landsbyforbyelse).
These are all interesting cases that showcase how much Denmark is doing to tackle issues related to vacant and derelict buildings.
References:
Boligejer (N.D.) Bopælspligt: http://bit.ly/2vYEBhX
Boligejer (N.D) At købe bolig i Danmark: http://bit.ly/2w0jN8a
CSO: Central Statistics Office (2016) http://bit.ly/10R1hyp
Danmarks Statistik (2016): http://bit.ly/2xsXRBX
Erhvervsstyrelsen (N.D.) Pulje til landsbyfornyelse: http://bit.ly/2g1N6Dx
Housing Gov.: Department of Housing, Planning and Local Government (2017) Minister Murphy announces actions underway on Vacant Homes: http://bit.ly/2wI1xjZ
Legal Desk (N.D.) Bopælspligt http://bit.ly/2vVgLDW
SKAT (N.D) Generelt om ejendomsvurdering, ejendomsværdiskat og ejendomsskat: http://bit.ly/2xcSM1t
SKAT (N.D.) Ejendomsværdiskat og ejendomsskat (grundskyld): http://bit.ly/2wyYdut
Tinglysning (N.D.) http://bit.ly/2g1ORQN
Who owns England (2016) http://bit.ly/2wEUJpx
