Sunday 22 July 2018

Extra social houses and a vacant site levy hike among Budget measures to address the housing crisis

Stock photo
Stock photo
Paul Melia

Paul Melia

MORE funding for social homes, an additional €75m to open up sites for housing development and a doubling of the vacant site tax are among the housing Budget measures announced by Finance Minister Paschal Donohoe.

The Government also plans to provide €750m in commercial lending for home builders, which will deliver up to 6,000 homes and help struggling small and medium-sized builders who cannot secure finance.

Some €1.83bn will be spend on housing in 2018. A total of 3,800 new social houses and apartments will be built by local authorities and approved housing bodies, and an additional €149m will be spent on the Housing Assistance Payment, which is paid by the State to landlords.

The spend on homeless services will also increase by €17m to €116m.

The Government has pledged to deliver an additional 4,000 extra housing units next year.

The main points include:

  • An additional €500m for 3,000 new build social homes which will be delivered by 2021. This increases the target for new build under Rebuilding Ireland, which rises to 33,500.
  • Some €226m is already allocated to fund infrastructure needed to open up sites for housing. An additional €75m will be provided, with matching funds from councils, which will deliver 5,000 affordable homes by 2021.
  • The Ireland Strategic Investment Fund will make €750m available for commercial investment in house building. This will be distributed by a new agency, Home Building Finance Ireland.
  • Commercial stamp duty, as expected, will increase from 2pc to 6pc, but a refund scheme will be in place for residential land, subject to it being developed within 30 months of the site being developed.
  • The vacant site levy, due to come into force next January, will more than double from 3pc. In January 2019, owners will pay a 3pc levy based on the value of the land, rising to 7pc in subsequent years.

“What this means in practical terms is that any owner of a vacant site on the register who does not develop their land in 2018 will pay the 3pc levy in 2019 and then become liable to the increased rate of 7pc from January 2019,” the minister said.

"If they continue to hoard their land in 2019, they will pay 7pc in 2020, resulting in an effective vacant site levy of 10pc over the two years."

There is bad news for homeowners who bought a home between 2004 and 2012. Mortgage interest relief will cease at end of the year, and will be tapered down to 2020.

The rate will remain at 75pc next year, falling to 50pc in 2019 and 25pc in 2020.

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