Cutting the windfall tax on rezoned land and reducing the VAT on building houses in October's budget would help boost the supply of residential accommodation, one property industry group has told Minister for Finance Michael Noonan.
Property Industry Ireland’s (PII) pre-budget submission says that accelerating an existing programme of selling surplus State property could be used to fund up to 5,500 new social houses and aid the Government in its pledge to end homelessness by 2016.
The group, an Ibec affiliate which represents all sectors of the Republic’s property industry, also says that cutting the windfall tax on property that is rezoned from agricultural use to residential to the standard 33 per cent rate, from its current 85 per cent level, would help speed up the supply of suitable land.
It is also calling for a time- limited reduction on the VAT rate on the construction of residential property to 9 per cent, from 13.5 per cent.
It it argues that this would help cut the upfront cost of providing new homes and aid in improving the financial viability of new development without requiring house prices to rise further.
At the document's launch yesterday, PII director Peter Stafford said the reduced VAT rate need only apply until the problems it was designed to address, a squeeze in housing supply in key urban areas, was close to being resolved.
He pointed out that this year, about 8,400 new houses would be built in the Republic, while actual demand was estimated at 25,000 houses, with 16,000 of those required in cities and towns and 9,000 of that group needed in Dublin alone.
The PII submission says that the housing charity Threshold estimates that more than 6,000 new social homes a year will need to be built in the Republic over the medium term.
According to the group’s figures, in the aftermath of the financial crisis, spending in this area collapsed from €1.5 billion in 2009 to €376 million last year.
“Existing programme”
“The Government has an existing programme of disposing of surplus properties to reduce running costs and is raising about €30 million a year,” the organisation says.
“The capital income from an accelerated, programmed, strategic asset-disposal strategy could amount to €250 million over the next five years and should be ring-fenced to attract private investment and fund the construction of 5,500 new houses.”
Mr Stafford argued that it if the Government were to guarantee a rental income stream from social housing, it should be possible to attract private sector cash to ensure enough resources to deliver the 5,500 homes.
