Call for tax cuts to stimulate house building
Published 24/07/2014 | 02:30
House builders have called for tax cuts to stimulate construction of family homes.
And they said the Government could raise €250m to build social housing by selling off excess State properties.
The property industry has called for a cut in the value added tax (VAT) rate on construction of homes from 13.5pc to 9pc for a limited period.
Property Industry Ireland (PII), which is part of employers' body IBEC and whose membership includes builders, surveyors and engineers, said in a pre-Budget submission that 5,500 new social homes could be built if the Government sold off surplus State properties.
Such a sell-off has the potential to raise €250m over a five-year period, director of PII Peter Stafford said.
There has been policy in place since 2009 to offload excess publicly-owned property, which is raising around €30m a year.
But this could be increased to €50m a year, with the funds ringfenced and going to housing charities to get social housing constructed. This could produce 1,100 properties a year.
Asked why a body that represents the builders and property professionals was so interested in social housing, Dr Stafford said the provisions of social and private houses were interconnected.
And he admitted building more social houses would give jobs to the member firms of PII. On private housing, PII wants lower VAT on the cost of constructing homes for as long as it takes to get home building going.
The property industry also wants the rules that require builders to provide some social housing as part of each development to be reformed.
Between 30pc and 40pc of the cost of a new home goes to the State in levies and taxes. Development levies are as high as €50,000 per unit in parts of Dublin, with costs passed on to buyers, who then have to pay property tax every year.
"We will build fewer than 10,000 private houses in 2014, less than half the required amount. A lack of supply in the private sector further increases prices and rents, but also puts more people in danger of homelessness," Dr Stafford said.
He estimated around 8,400 homes will be built this year, but most will be one-off houses. There was a need for three times this number of private and social housing units, he said.