Tuesday 19 June 2018

Hiking stamp duty will make housing crisis worse, warn industry leaders

CIF's Tom Parlon said it would be “counterproductive” to introduce measures that add to the cost of construction.
CIF's Tom Parlon said it would be “counterproductive” to introduce measures that add to the cost of construction.
Ellie Donnelly

Ellie Donnelly

Real estate advisory firm Savills Ireland has warned that any move to increase commercial stamp duty in tomorrow’s budget could exacerbate the housing crisis.

It is understood that, with limited fiscal space available, the Government is scrambling to identify revenue-raising schemes.

And items coming under the spotlight include a potential increase in the stamp duty on commercial property transactions.

Stamp duty on non-residential property transactions is currently 2pc, and last year €256m in tax revenue was raised from this source.

However Savills’ director of research, Dr John McCartney, has noted that most residential land sales, which are a necessary starting point for housing development, are classified as commercial property transactions.

"The housing crisis originates from an absolute shortage of residential property. One reason for the shortage is that, in certain locations and for certain types of property, it costs more to develop units than they can be sold for.

Raising the stamp duty on sites will make this worse by increasing costs at the very time when we should be reducing them," Dr. McCartney, said.

The potential move is also being criticised by the Construction Industry Federation, who noted that, after the Government last week announced a series of proposed changes to regulations in the area, it would be "counterproductive" to introduce measures that add to the cost of construction.

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