The Problems of Taxation-Induced Inner-City Housing Development - Dublin's Recipe for Success?

Abstract

In an attempt to foster inner-city regeneration, the Irish government's Urban Renewal Act and Finance Act of 1986 provided significant tax incentives to inner-city property owners and investors. The generous nature of these incentives has induced an apartment boom in Dublin which contrasts strongly with the city's long history of inner area decline. Commentators focusing on the dramatic market response to these incentives have suggested that the ‘Dublin experience’ provides a template for renewal policies elsewhere and suggest that the scheme has the potential for revitalising inner-city home ownership. Such analysis pays scant regard to the long-term implications of the incentives and the generic problems associated with area-based renewal packages. A review of the consequences of earlier incentives used to expand home ownership in Ireland, plus an analysis of current institutional behaviour and residents' perceptions, highlight the potential longer-term problems facing this market.

Keywords:

• Property-led regeneration
• tax incentives
• negative equity
• capital values