Six ways the budget has affected the property market
Published 18/10/2015 | 02:30
We heard whispers that Environment Minister Alan Kelly tried long and hard to have his voice heard louder at the Cabinet table when it came to Budget discussions. As it transpired, there were far fewer measures affecting the property market than might have been expected. Sinead Ryan rounds up the key points
1 IF YOU'RE A FIRST TIME BUYER
Some easing of the deposit requirements laid down by the Central Bank were rumoured, but didn't come to pass. However, Nama was ordered to deliver 20,000 new houses before the end of 2020 and 90pc of them will be in the Greater Dublin area, which is suffering the most from high prices and lack of supply. For first-time buyers this is a great move as three-quarters of the units being ordered are "starter homes" and will be, crucially, houses, rather than high-density apartments.
However, we know of old that the best laid plans often get scuppered by the planning process itself, so it remains to be seen exactly when, where and how these new homes will manifest themselves.
2 IF YOU'RE STAYING PUT
The good news is that if you wish to do a little upgrading, building or improving, the Home Renovation Incentive Scheme is being extended until December 2016. This scheme has proved immensely popular, not to mention its success in getting builders and other trades people back working and out of the black economy. It sees VAT being returned at 13.5pc on works costing between €4,405 and €30,000.
In addition, an announcement to freeze Local Property Tax at current levels until 2019 was made, meaning homeowners no longer have to face into revaluing their homes next year as had been expected.
3 IF YOU'RE MOVING ON
The purpose of the Fair Deal or Nursing Home Support Scheme was to allow older people to retain their family home, especially if their spouse still lived there, while they moved into full-time residential care. The co-payment for care includes the family home asset, but unlike other assets, it is "capped" at 7.5pc per year and for three years. In addition, it can be deferred until after death, costing nothing immediately. However, waiting lists had lengthened, and in some cases risen to around nine months, forcing families to make the terribly hard decision to sell up in order to pay for nursing home care.
In the Budget, new resources were allocated, meaning that the wait time for a decision to be made on eligibility for the scheme will take no more than four weeks.
As 50pc of entrants under the scheme come from acute hospitals, it will also free up these "bed blockers" from wards.
4 IF YOU'RE PASSING ON
Inheritance Tax has been increased and the tax-free thresholds cut down in successive budgets over the last number of years. The Class A threshold - that which applies between parents and children - had been just €225,000. In the Budget it is being increased to €280,000. At its peak it was over €0.5m, and this small measure, while welcome, still means that parents leaving the family home to, say, one child, particularly in Dublin, will find the house may still have to be sold to pay the tax due.
There had been calls to restore this threshold to at least €400,000 but this has not happened.
5 IF YOU'RE A LANDLORD
There were no changes specific to landlords or tenants, especially in the area of rent certainty, which Minister Kelly had sought. However, with the reduction of Universal Social Charge across all rate bands, the tax payable on rental income is reduced, meaning landlords will breathe a sigh of relief to some extent.
6 IF YOU'RE HOMELESS
A sum of €70m has been provided to assist in the provision of units for homeless people and 9,500 social housing units will be funded until 2018 via direct investment and Public Private Partnership, of which 3,100 are due to come on stream in 2016.
Nama already has a specific remit to build social housing but is often stymied by local authorities. In 2015 for example, it identified 6,542 units which could be used/converted for the purpose, but only 1,368 were delivered. The main reason is that local authorities deem them to be in the wrong place, or of the wrong type.
One imagines that many people now living in B&Bs would be pleased with any house, so more work needs to be done on integration of services. New units will be earmarked for areas where the need is highest, we're told.