Wednesday 7 December 2016

Landlord tax breaks planned to solve housing crisis

Niall O'Connor and Colm Kelpie

Published 24/09/2015 | 02:30

Measures: Housing Minister Paudie Coffey
Measures: Housing Minister Paudie Coffey

Tax breaks for landlords are being proposed ahead of the budget as a means of finally tackling spiralling social housing waiting lists.

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The plan is being strongly considered as the Coalition desperately tries to bring the housing crisis under control.

There is a growing desire within Government circles to provide greater incentives to encourage landlords to take on families who are living on social welfare payments such as rent supplement.

The numbers lingering on social housing waiting lists have reached their highest level to date - with several thousand applicants lingering for over a decade in parts of the country.

The Irish Independent can reveal that the Department of Environment has drafted proposals that would see tax relief being offered to landlords who sign up to the so-called RAS and HAP housing schemes, which are targeted at social welfare recipients and the long-term unemployed.

The plans have emerged as crunch budget talks begin today between Finance and Environment Officials on the Government's housing package.

Environment Minister Alan Kelly wants to ensure agreement is reached on a much-anticipated rent certainty package ahead of the Budget.

Issues such as transforming Nama into a housing agency, the roll-out of modular housing and the homelessness crisis are all expected to be discussed as part of the housing strategy in the Budget.

But the emergence of plans for a tax break for landlords illustrates the growing concern about the social housing crisis across the country.

With just under three weeks to go until Budget 2016 is unveiled, negotiations between different departments are intensifying.

Fine Gael figures, including Housing Minister Paudie Coffey, are understood to be pushing for a suite of measures aimed at addressing housing supply.

One of these measures relates to reducing development levies on vacant sites in a bid to rejuvenate the construction sector.

"You have a situation where there are 18,000 sites that have planning permission and yet they are not being developed - something has to change," said a Government source.

But Mr Kelly is also desperate to secure agreement on his long awaited rent certainty package in the coming days so assurances can be provided to tenants ahead of Budget day.

The overall package is likely to include the linking rent to the inflation over a period of a number of years, as well as the creation of long-term leases between landlords and tenants.

The news comes as the Nevin Economic Research Institute (Neri) urged the Government to reconsider plans for tax cuts in the Budget, and instead take what it described as a more strategic and long-term investment approach.

Ahead of the publication of its latest economic commentary, the trade union-funded think tank said tax cuts won't grow the economy in the long run. It claimed they were more likely to increase the wealth and income divide.

"The Institute urges the Government to prioritise long-term strategic investment over short-term giveaways such as tax breaks or tax cuts especially where these disproportionately benefit the better off," said Neri director Dr Tom Healy.

"Budget 2016 must put the emphasis on investment for future prosperity and equality."

Productivity

Neri said the economy's ability to grow depends on its ability to generate productivity gains year-on-year, yet productivity growth has been on a downward trend for more than 20 years.

"The best way to sustain growth in productivity over the long-term is to invest in education and skills, in productivity enhancing infrastructure, and in the production and diffusion of new technologies and ideas," Neri economist Dr Tom McDonnell said.

"Increased investment in strategic infrastructure, in research, and in the early years of childhood would all help to increase the economy's future productive capacity. "

Neri is forecasting growth this year of around 6pc, dropping to 4.1pc next year.

Total employment will reach two million sometime toward the middle of next year, the organisation is predicting.

The unemployment rate is set to average 9.5pc this year, falling to 8.6pc in 2016 and 8.3pc in 2017.

Irish Independent

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