300 object to proposed ending of property reliefs

SOME 300 submissions were received by the Department of Finance over its budgetary plans to axe Section 23-type property reliefs, it was confirmed yesterday.

In last December’s 2011 budget then minister for finance Brian Lenihan announced the ending of the property reliefs.

However, in the period between the budget and the Finance Bill where Minister Lenihan opted not to proceed with ending the reliefs, the department received 300 submissions.

Mr Lenihan stated that the ending of the reliefs would remain in the Finance Bill, but an economic impact assessment would have to be complete before they could come into effect.

Records released through the Freedom of Information Act, reveal the dire warnings made by representative bodies if the reliefs were abolished.

Irish Hotels’ Federation president Paul Gallagher said that if the changes were enacted “it could lead to numerous claims by investors under tax deed/warranty clauses”.

Mr Gallagher said: “The consequences for hoteliers could be disastrous. The amounts of compensation could run into the hundreds of thousands for individual hotels, which are, as you know, already under huge pressure.”

In a submission on behalf of chartered, certified and management accountants, chairman of the Consultative Committee of Accountancy Bodies, Liam Lynch, stated: “The property reliefs appear to have been abolished for no reason other than that they were no longer politically desirable.”

He said: “Poor policy diminishes us all: those who formulate it, those who apply it and those who must suffer its consequences.

Mr Lynch stated that the withdrawal of Section 23 reliefs “is hugely damaging. A property sector, already reeling from the downturn, is dealt another valuation blow”.

He warned that the ending of Section 23 would result in “business plans already submitted to NAMA in relation to loans secured on tax incentive properties being no longer valid.”

Mr Lynch said: “The reputational cost of the changes is very high and will undermine our credibility as a destination for Foreign Direct Investment (FDI).”

The Irish Auctioneers and Valuers’ Institute (IAVI) and Society of Chartered Surveyors warned that the changes could affect up to 100,000 properties nationwide — 40% of all rental properties.