Increased costs for servicing holiday homes suggested

Housing: Severe increases in costs for services to holiday homes and the re-introduction of property tax are among the measures the Government should consider to manage house price inflation, the Economic and Social Research Institute (ESRI) said yesterday.

Pointing out that more than 50 per cent of new homes in Co Donegal and more than 60 per cent of new homes in Co Leitrim are holiday homes, Prof John FitzGerald said the State's efforts to reduce house prices had been concentrated on building more houses.

While this was necessary and the State was having some success in its target of 50,000 new houses annually, he said little was being done to curb demand for new houses and so reduce housing inflation.

Prof FitzGerald said measures needed to control the housing sector could include the imposition of the full cost of infrastructure, to be paid by all who own second or holiday homes.

"So if I own a holiday home in Ballydehob (Co Cork), where the ESB has recently installed 10kV lines at great expense, I should pay the full cost of getting power from those lines."

Prof FitzGerald said the same should apply to the telephone service.

"If it costs €10,000 for a telephone then that's the cost that must be paid."

Water was also a very expensive resource, he continued.

While it would be different if people were prepared to go to the well for water in their holiday homes, the cost of supplying a house which had "empty beds" for most of the year was prohibitive.

The proliferation of second houses in the west of Ireland had created significant house price inflation there.

This was affecting balanced regional development, making it difficult for people to "work in Donegal and live there too", he went on.

This, concluded Prof FitzGerald, was having a bad effect on balanced regional development, as high house prices made it difficult to live in regional counties like Donegal.

In relation to social and affordable housing, economic consultant Mr Colm McCarthy, of DKM Consultants, said better use of existing resources could be made by the State.

He instanced the sale of local authority houses to tenants at "less than half the market value" because tenants had acquired the right to buy, having rented over a long period.

However, he questioned whether this was in the Government's interest and he compared it to a "bucket with a hole in the bottom. We have to keep filling it from the top."

Mr McCarthy went on to explain that local authorities replaced housing stock which had been sold with new housing, and this was not an efficient use of funds.

Commenting that almost all the State's efforts to reduce house prices were directed towards supplying more new houses, Mr McCarthy said comparatively little had been done to reduce demand and he felt one solution might be a property tax.

Such a tax would lead to a lessening of demand and so of prices.