Proposals for tax incentives to stimulate private sector investment in housing are expected to be discussed with the Taoiseach and Tánaiste at a Cabinet committee on housing next week.
Several sources with knowledge of recent discussions in Government confirmed that some form of tax incentive scheme – offering tax breaks for investment in a bid to ramp up homebuilding – would be among the ideas to be tabled.
Sources stressed that nothing has yet been agreed, and any scheme is likely to be strictly timebound and limited in scope, perhaps to brownfield sites.
There is also certain to be some opposition from the Department of Finance, which is responsible for tax policy and was badly scarred by the proliferation of property-based tax incentive schemes which fuelled the property boom of the 2000s and the subsequent crash which left the country bankrupt.
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However, Taoiseach Micheál Martin has repeatedly spoken lately about the need to attract private sector investment into the property market in order to increase the delivery of housing.
Last week he told the Dáil: “We need a fundamental shift, not just within the Government but in the Oireachtas more generally, in our approach and our attitude to private sector investment in housing. That is needed because, whether we like it or not and whether it is palatable or not, a lot of what has happened has disincentivised private investment in housing...The State will not be able to do it all on its own.”
Mr Martin has repeated this sentiment on a number of occasions recently. On Sunday, he told RTÉ’s This Week programme that it was clear to him the State would need to “pivot more strongly to getting private sector investment into the market”.
“The Government is spending huge amounts of money in housing, record levels of spending. The State can’t do it all on its own, and we have to be honest about that. I believe it will entail politically very difficult decisions.”
Tánaiste Simon Harris is also said to be open to discussing the idea, according to senior sources.
[ Taoiseach signals possible end to Rent Pressure Zones by end of yearOpens in new window ]
The recent report by the Central Statistics Office which found that just over 30,000 housing units were completed last year has spooked senior Government figures, many of whom spent the second half of last year – including the general election campaign – predicting that 40,000 units would be completed by the end of 2024.
There is an emerging view that without a dramatic reset of housing policy now, at the start of the Government’s term of office, there is little or no chance of reaching the target of 300,000 units over the lifetime of the current Dáil that has been promised by the two coalition parties.
One person involved described the CSO report as a “stark warning” that a change in policy was needed. Another person involved at a high level said that “nothing is off the table” in the current policy review.
Sources involved say that if a move was signalled now it could be implemented in the budget in the autumn, and begin straight away. The hope then is that results would be seen before the next general election in 2029. Government is keenly aware of the long lead-in time for housing measures to take effect in the market.
The reform of rent pressure zones is also likely to be part of the package of measures on housing considered by Ministers next week. The move was also signalled by Mr Martin over the weekend, while sources say that there could be changes to cost rental schemes and a renewed effort to crack down on short-term lets.
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