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Call to slash VAT and kick-start the building industry

Rapidly-rising house prices in Dublin could be stabilised by giving incentives to double new home construction, the Construction Industry Federation has claimed.

The Government has accepted that 25,000 new homes need to be built every year, but only 10,000 are being built this year, said Tom Parlon, the federation's director general.

Prices will continue to soar in Dublin, and the current shortage of new homes will continue unless new measures are introduced, he said.


The federation proposed a series of steps to boost the supply of new homes, including:

l Creating incentives for new home buyers such as a property tax rebate, a partial rebate of the development levies paid to developers and additional tax allowances for first-time buyers.

l Replacing the Part 5 development contribution for social and affordable housing with a 1pc levy on sales of all housing new and old.

l Introducing a temporary 9pc VAT rate for residential construction.

l Creating a special development finance fund.

l Establishing a Help to Buy scheme.

l Creating a tax incentive special savings scheme.

l Restoring full interest relief for investment in residential property for letting purposes.

Mr Parlon, a former Progressive Democrat TD, said: "Everyone knows there is a supply issue when it comes to housing in this country.

"We've had so little building taking place over recent years that there simply aren't enough houses to meet the demand.

"By introducing these measures we believe the country would get a supply of housing fit to meet its needs.

"Some of the measures would greatly reduce the cost of house building.

"For example, if the Part 5 development contribution was to be replaced by a 1pc levy on all house purchases it would ensure sufficient funding for social and affordable housing.

"It would also reduce the cost to those looking to build and buy new homes."


"Why should this tax be specifically geared only towards new housing, which is currently the case?

"The proposals are included in the federation's pre-Budget submission to the Government and include measures aimed at boosting employment."

These measures would include extending the Home Renovation Incentive limit to €50,000 and prolonging the scheme, said Mr Parlon.

They also include revising apprentice training programmes to attract more people to pursue apprenticeships and abolishing the special tax rate on the rezoning of land.