23.10.08 The new €200 levy on non-principal private residences is certain to cause a shortage of availability of studio-type and one-bed apartments, auctioneers said today.

The Chief Executive of the Institute of Professional Auctioneers and Valuers (IPAV), Fintan McNamara, said that while the Minister for Finance had referred to the levy as  being set at €200 “per dwelling” in his Budget speech, his Department had since confirmed that the levy would, in fact, be per unit of accommodation.  This, he said, had major implications for the supply of accommodation and needed to be capped by the Minister for the Environment, Heritage & Local Government in upcoming legislation.

“The Government now appears to be reverting to a form of taxation which is akin to the old rates but levied on houses which provide a home for a significant proportion of  marginalised people and Social Welfare recipients, particularly people with  poor interpersonal skills who often prefer the privacy of studio-type accommodation rather than to share a house with two or three other persons,” he said.

Unfortunately, he said for these tenants, the availability of this type of accommodation has been halved over the last 15 years down and is now almost exclusively confined to 30,000 old converted houses.

“Moreover, the devil as usual is in the detail and it appears that converted properties could now be liable for a combined PRTB registration fees, five sevenths of which go to Local Authorities  and the new annual levy which, when combined, could be of the order of between  €2,000 and €3,000,” he added.

Mr McNamara said the new levy would cause investors to consolidate smaller units into much larger ones so as to be liable for less payments per house.

“The Government faced uproar because it failed to consult with the medical union in 2001 and negotiate GP fees in advance of introducing what was a hastily designed and politically motivated measure targeted at the grey vote,” he said.  “In this instance, the Government also appears to have failed to learn from past mistakes in relation to local authority charges, in particular the opposition to the £40 registration charge on all units of rented accommodation introduced in 1996 and which was abolished in 2004.”

He said it was likely, however, that in the not too distant future, there would be agitation from groups representing marginalised people who traditionally availed of studio-type of accommodation

“The Government needs to cap the new levy if it wishes to avoid this scenario developing,” he concluded.

For further information contact Fintan McNamara  on 086 8245 673 or Tim Ryan Communications on 087 2471 423.