Social Democrats co-leader Róisín Shortall has urged the Government to increase the rate of the new vacant homes tax which she said was set at a "pathetically low level".

Unused homes will incur a tax of 0.3% next year with the aim of encouraging owners to rent or sell those properties.

Ms Shortall called on the Government to implement a rate of 10% which she said could make a big difference.

Public Expenditure Minister Michael McGrath said the new tax is a significant measure and he said the Government would monitor its implementation and keep the rate under review.

Housing posing an 'enormous challenge'

Public Expenditure Michael McGrath has said that housing is posing an enormous challenge, but more homes are being built this year.

Speaking in the Dáil, he said that for the first time in the country's history, funding is not a constraint to building homes.

The Minister was responding to Sinn Féin leader Mary Lou McDonald, who said the Government's housing policy had failed abysmally and today's BPFI report shows that housing supply is not keeping up with population growth.

Housing commencements are also down and the Government's targets for social housing are too low, Deputy McDonald said.

"Nearly half of renters are considering emigrating," she added.

Deputy McDonald said her party would "move heaven and earth" to get homes for younger people who are now thinking about leaving the country.

She also called for a three-year ban on rent increases.

Vulnerable people 'not getting the housing they need'

Minister Michael McGrath called on the Opposition to appeal to people to stop objecting to new housing developments, insisting that "the Government is leading on this issue".

He was responding to PBP-Solidarity TD Richard Boyd Barrett who said that the country needs a new administration, not just a new Taoiseach, as rocketing rents are driving people abroad, something which "puts shame on this Government".

He said that "very, very ill and vulnerable people" are not getting the housing they urgently need, and that an underspend in the housing budget of €700m is not acceptable in the face of a "catastrophic market failure causing human misery".

Deputy Boyd Barrett noted that the four local authorities in the capital, Dublin City Council, Dun-Laoghaire Rathdown, Fingal and South Dublin County Council, "built no new council houses" in the first half of this year.

Residential zoned land tax an 'imposition' on farmers

Independent TD Seán Canney has described a new residential zoned land tax as an "imposition" on famers and should be "wiped off the agenda".

Deputy Canney said that some of the zoning was "daft" and would leave farmers worse off.

However, Minister for Public Expenditure said that in cases where "daft zoning" took place, then "daft zoning" should be undone immediately.

Michael Canney had told the Dáil during leaders' questions that some of the zoned land was unsuitable for residential development.

In response, Michael McGrath said that local authorities had published their draft local development plans and that it was possible for farmers to avoid the tax by appealing those decision.

Mr McGrath said that it was not possible for famers to maintain the residential zoned land status while not paying tax on it, given the housing shortage being experienced in the country.

"We can't have it every way," Mr McGrath said.

Additional reporting: Tommy Meskill