The Government has been urged to reintroduce a contentious Celtic Tiger-era tax relief to create badly needed student accommodation for the “rapidly expanding” South East Technological University (Setu).
The move, it has been claimed, would free up room in housing estates designed for families but occupied by third-level students.
In an appeal to Government Ministers, Waterford Chamber pitched a return of a “refined” section 23 tax relief, despite “the negative connotations” surrounding it with past developers.
The original scheme, discontinued after the economic crash, allowed investors generous tax breaks for renovating or buying mainly urban properties for the rental market.
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Last year, a similar call for its reinstatement was made by the Institute of Professional Auctioneers and Valuers, which argued insufficient attention was “being paid to market realities of what actually works to deliver homes”.
In an overture to Minister for Housing James Browne, Waterford Chamber said the return of a refined scheme would facilitate upper-floor conversions, providing much-needed accommodation for students and tourism.
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“Setu is a rapidly expanding new university that needs the opportunity to grow and develop to its full potential,” it said in a letter obtained under the Freedom of Information Act.
“Like many other third-level institutions, it faces accommodation shortages, with a significant portion of students living in nearby housing estates originally intended for families. Relocating students to accommodation in the city centre would free up much-needed family homes while also creating valuable tourism accommodation during the summer months when students are away.”
It said that, as with many cities and towns, Waterford’s underutilised upper floors in commercial and mixed-use buildings often remain vacant due to high renovation costs, outdated planning regulations and a lack of financial incentives for landlords.
A “section 23-style tax relief” would allow renovation costs to be deducted from rental income over a period of time.
The chamber did not immediately receive a response from the Minister.
The previous tax provision allowed full rental relief but was generally contingent upon the property being let for 10 years.
However, there has been considerable resistance to section 23-style policy. Critics believe the original went too far in helping fuel unsuitable and inappropriate developments and in driving excessive lending.
Last February, Minister for Finance Paschal Donohoe said he would not support the reintroduction of harmful tax schemes that existed during the property boom. Previous models, such as section-23 relief, had proved to be “very, very costly”, he said.
Sinn Féin finance spokesman Pearse Doherty recently told the Dáil that section 23 “drove the reckless speculation that broke this economy” and led to mass unemployment and ghost estates. “Resurrecting section 23 will be a disaster,” he said.
