Slash Vat rate on new homes to zero, urges Abbey chief
The Vat rate on new homes should be cut to zero to help fuel their construction, according to one of Ireland's top homebuilders.
Abbey executive chairman Charles Gallagher said Vat of 13.5pc on new builds is "a massive tax". In the UK, where Abbey has the bulk of its business, Vat on new-builds is zero.
He said the price of home building has risen "substantially" in the last decade.
"Vat on housing - 13.5pc - is a massive tax. If you go to regional areas 60 or 70 miles outside Dublin, it makes it uneconomic to build new houses for speculative sale."
He added: "If you want to increase output and if you want to increase public housing, you still need to reduce the costs. You need to have policies to reduce the costs.
"Somebody has to say: do we really think a shortage of housing is a national emergency, or do we think planning control is the priority? Do we think that raising revenue from Vat [is a priority]? What are our priorities?"
Mr Gallagher also said Nama should use its powers to accelerate home construction, with interventions to push developers to build faster.
Speaking after Abbey's AGM, Mr Gallagher claimed that the lack of available mortgage funding, coupled with Central Bank lending rules, means there is a danger that new homes will be built but no one will be able to buy them.
"We're going to have a situation arising where there's a national housing crisis, but developers may struggle to sell the houses that they've built," said the chairman.
"There's not enough mortgage money, not enough loan money, available to finance a substantial increase in new housing output."
Mr Gallagher said if Vat was reduced on houses, it will "in time, lead to higher output".
"It would also lead, initially at least, to higher profits for speculative builders," he added. "If people find that hard to swallow, then they won't do it."