This article proposes a bold plan to tackle urban decay by leveraging the tax system. It advocates for a dereliction amnesty, followed by hefty penalties for owners who refuse to sell, and significant tax breaks for those who renovate and occupy derelict buildings.
The sorry state of our cities and towns is a cause for shame. Vacant buildings, regardless of their age, represent a colossal waste. The widespread urban decay is a perplexing phenomenon, raising questions about our values and priorities. Why have we allowed this to happen? Who benefits from this blight, and in what world is neglect a desirable outcome?The fortunate news is that, from a business perspective, urban decay is readily solvable.
To rectify this situation and stimulate a wave of renovation and care, it must be financially advantageous to revamp old structures for both developers and prospective buyers. Landowners who currently possess derelict buildings must be actively engaged in the process. By creating a lucrative window for sellers to expedite their transactions, we can encourage them to relinquish ownership. Once this period concludes, we must implement stringent penalties for maintaining derelict properties. This comprehensive approach is entirely feasible and can be implemented immediately. The tax system should function as the instrument to incentivize positive behavior and discourage detrimental actions. Dereliction should be recognized for what it truly is: an antisocial act perpetrated by individuals that harms the wider community. Dereliction spreads insidiously, as each neglected building implicitly grants permission for more to become derelict. Dilapidation begets further dilapidation, and this blight spreads like a slow-moving virus, engulfing entire streets and districts. This pattern is precisely what we have witnessed in Dublin 1, the historic heart of the city, with its Georgian and Victorian architecture.The 'give it a lash' mentality among developers is exacerbating Dublin's dereliction problem. Owners of derelict buildings bear the initial responsibility. They need to understand that they have a duty of care towards both the building and the surrounding street; they are not mere anonymous landlords; they are custodians of cultural heritage. Just as we restrict children from driving because society deems them insufficiently responsible, we should view these agents of dereliction through a similar lens. Are they responsible citizens? When it comes to old buildings and vacant sites, there are appropriate and inappropriate owners. Owners who allow their buildings to deteriorate lack the civic maturity to own them; they fail to demonstrate the necessary social responsibility. Once we frame the fight against dereliction in terms of good and bad social behavior, the path forward becomes clear.Owners must be persuaded to become sellers and provided with a profitable opportunity to sell their properties for a defined period, such as 18 months. During this period, they avoid the looming threat of severe penalties. Before dismissing this as rewarding undesirable behavior, it's essential to recognize that it serves the greater good. A dereliction amnesty would operate on the same principles as a tax amnesty. When previous governments in the late 1980s introduced tax amnesties, they were overwhelmed with revenue. Amnesties are effective; they offer individuals an exit strategy. As the adage goes, 'you catch more flies with honey than vinegar.' The derelict buildings and unused sites would become available, transitioning from inappropriate to appropriate owners. This would fundamentally change the dynamics. If some owners of derelict buildings and sites persistently refuse to sell, the State should impose a crushing dereliction levy. If they fail to make payment within a short timeframe – say, a fiscal year – the property should be compulsorily purchased at a fraction of its value, and all legal and selling costs and fees would be borne by the owner. To ensure they are fully accountable, the tax bill of the delinquent owner/hoarder should be levied on their total worldwide income to prevent tax evasion or avoidance. Finally, similar to the register of tax defaulters, a register of delinquent owners should be published to publicly expose their negligence.The second phase of this process involves making it financially rewarding to acquire, renovate, and redevelop derelict buildings and sites. It should also be financially advantageous for owner-occupiers to move into these buildings. Remember, we are operating under the principle that 'dereliction is bad, renovation is good.' We need to incentivize renovators. A 100 percent tax deductibility allowance could be introduced, enabling the cost of purchase to be offset against taxes over a predetermined period. To accelerate development, a time-sensitive incentive could be implemented, so that if construction commences immediately, the allowance is 100 percent, gradually decreasing as each year passes. The quicker the developer starts, the greater the tax break. If they delay, their tax allowance diminishes. Furthermore, the cost of materials could also be tax deductible. The incentive must be so substantial as to make it an irresistible proposition.Purchasing and occupying renovated buildings or apartments in renovated buildings should also be tax-efficient. The way to achieve this is to make mortgages for owner-occupiers fully tax deductible over a 20-year period. If the mortgage is €300,000, each year the owner would receive a €15,000 tax allowance on their mortgage, effectively minimizing their monthly payments
Dereliction Urban Renewal Tax Incentives Property Development Civic Responsibility
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