Monday 5 December 2016

Chartered Surveyors call on Government to cut VAT on affordable homes and finance builders to tackle crisis

Ronald Quinlan Commercial Property Editor

Published 01/09/2016 | 02:30

SCSI president Claire Solon says VAT on affordable homes should be cut from 13.5pc to 9pc
SCSI president Claire Solon says VAT on affordable homes should be cut from 13.5pc to 9pc

The Government's application of the 13.5pc VAT rate on the sale of new housing has been identified along with an inability by builders to access affordable development finance and deficiencies in the country's infrastructure as the three biggest barriers to tackling the housing crisis.

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The findings are contained in a new survey by the Society of Chartered Surveyors Ireland (SCSI), which it conducted as part of the preparation of its Budget 2017 submission to the Department of Finance.

Over half of the 300 chartered surveyors questioned for the survey said the Government's decision to introduce rent certainty measures had been one of the main reasons for private landlords exiting the sector.

Other contributing factors cited by the SCSI survey's respondents were the indebtedness of landlords and tax restrictions.

Referring to the SCSI's pre-budgetary submission, the society's president, Claire Solon, said a reduction in the VAT rate from 13.5pc to 9pc on new homes priced below €300,000 and the establishment of a development finance agency for builders were two measures the Government should adopt to address the ongoing dysfunction in the housing market.

Solon said the return of boom-era rents - caused by the current shortage of housing supply - had now combined with the slow gearing up of the construction sector in the wake of the crash to threaten Ireland's potential to avail of any opportunities created by the UK's Brexit decision.

The SCSI president said it was now crucial for the Government to address the depletion in investor activity in the residential property market.

On this, she said: "One solution would be to apply the principles of commercial property investment to residential development and investment. Specific measures which would help level the playing field would be to reinstate full mortgage interest relief and to remove USC and PRSI on rental income."

The SCSI's survey of its members also found that the most significant challenge facing provincial towns and villages in Ireland was the inadequate provision of broadband services.

In its pre-budgetary submission to the Government, the SCSI has called for the provision of additional funding for the roll out of reliable, high speed broadband services in all rural and provincial areas, a doubling of the Town and Village Renewal Scheme Grant Scheme to €20m and an overhaul of the regulations of the 'Living Cities' initiative.

The SCSI has also warned of the serious skills shortages facing the property sector and has called on the Government to commit a greater proportion of the National Training Fund to upskilling, retraining or transferring of workers into surveying disciplines while also allowing employers to access the fund directly.

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