Environment minister John Gormley insisted last week that any new property tax for homeowners would not be flat rate in nature. It was a welcome announcement as such a tax would be overtly regressive in nature, unfairly penalising those on lower incomes on a proportional basis in favour of those living in upmarket areas.
However, it does leave the government with just two options when it seeks to introduce a property tax - a move that is widely expected ? in the coming years.
The first option is self-assessment, a move that seems to have proven successful in relation to second homes where the €200 flat-rate tax yielded €56m for local authorities.
The other option, but one that would not be ready for the next budget, is to set up a national house-price statistics database that could be used to determine individual owners' liabilities on either a value or size basis. The problem at the moment, however, is that homeowners regularly have no idea what their house is worth because prices keep dropping. A new house-price register will therefore be a key plank if this method is to be adopted.
"The need for a more comprehensive house-price index to inform national economic and social policy by providing a more meaningful indicator of housing-market and wider macro-economic conditions, while also serving to form the basis of key decisions made by home buyers, home sellers and mortgage providers, has been recognised by the government," Gormley said in April.
"My department has held meetings with a broad range of interested parties to gather views on the shape that such a register might take. Once the work of this group has concluded, recommendations will be made to government. The timing of the establishment of the register will be determined by a range of factors including the possible need to amend the Data Protection Acts to allow for achieved sales prices to be published."
In the UK, the Land Registration organisations gather data on individual property sales through questions on a house's size, number of bedrooms and type of premises. Their House Price Index is based on this data.
While the Property Registration Authority (PRA) here gathers information on the sale price (because the fees in the case of a sale are based on the price paid for a property), it does not have such a role but could do so if asked in a way that would meet with the Data Protection Commissioner's requirements. Some changes to the rules, application forms or legislation may be required but this could lead to the publication of the average price paid within a certain area for a certain type of property as opposed to the price paid for each individual property.
"At present the Department of the Environment has been asked to lead a project in this area and we are providing assistance to it as the project develops," said Michael Treacy, corporate services manager at the PRA. This information could possibly be linked to other databases already in existence, such as those used by the Valuation Office in commercial property transactions. There is also a belief in property circles that a rate system will be in place for many properties already as they would have been assessed for rates in 1977.
The PRA is close to completing the digitisation of the register with folio and map-related data due to be completed by July when Galway becomes the final county to be signed off. The digitised boundaries are currently being quality assured. It's been a mammoth project – 15 million boundaries have been digitised using an Ordnance Survey Ireland framework and included in the project were 1.95 million titles linked to 2.8 million individual property parcels.
Eventually the information this map could provide has the potential to link to information from other agencies such as those overseeing zoning, planning applications or Valuation Office data. "We are pushing the boundaries out and we will be looking at it in consultation with other agencies, and will be looking at exploiting this potential over the next 12 months," Treacy said. There are plans to have the service available to the general public by year end.
It's also much more efficient. About 500,000 changes to the register are made per annum, with a further 80,000 to 100,000 still being done in the Registry of Deeds. The number of users of the PRA's landdirect.ie rose from 1,700 in 2000 to 14,600 last year and the number of online business transactions is up from 200,000 to 2.6 million in the same period. As a result of the systems, and the capture of historical data, 90% of services provided online do not require staff intervention at the PRA and almost 100% of applications for some services are now done online.
Separately, the PRA is working with the Law Society, IBF and Revenue on an online registration system for transactions affecting the Land Register and in the next phase will liaise with the Companies Registration Office, and the Courts Service's Probate and Judgments offices to ensure, where possible, that all systems can work seamlessly together in future.
The estimated value of titles registered by the Land Registry, which carry the state guarantee on the registration of the title, was €1 trillion in 2006 – €600bn of which came from housing – and although this was pre-crash, about 200,000 new houses alone have been added since then so the overall value may not have changed significantly. That suggests that an annual tax of 0.25% payable on the value all of the property in the state could yield an annual payment of €2.5bn to the Exchequer.