Vat cut proposed to tackle house price rise

The Society of Chartered Surveyors has issued a 10-step strategy to address the unsustainable inflation in the Dublin housing market and the supply shortage fuelling it.

The organisation yesterday released a plan to increase supply and curb demand in the Dublin market which has seen a 24% increase in house prices in the last 12 months.

Among the measures recommended by the group are the establishment of a builders finance fund; a reduction of Vat to 5% on new home construction for two years; and encouraging Nama to license developers to build sites in strategic locations.

Society chairman Simon Stokes highlighted the potential positive impact a fund to aid struggling builders could have in Ireland following the introduction of similar measures in the UK.

“There is a lack of development finance for builders but the government could address this by establishing a builders finance fund. In the UK a builders finance fund of €660m has been established to help smaller builders and to speed up housing developments of between 15 and 250 units which have slowed down or stalled,” said Mr Stokes.

“A reduction in the Vat rate for the hospitality sector worked extremely well here in recent years, boosting the tourism sector and helping to create 15,000 jobs. We believe a reduction in the current 13.5% Vat on new homes to 5% for a period of two years could have a similarly positive impact on house building on job creation,” he added.

Other measures being proposed by the group include reducing the windfall tax on land from 80% to 33% and introducing a property tax exemption for people trading down to smaller homes.

The exemption, the group said, would increase the availability of second hand homes which would reduce demand for new housing units.

More continental-style apartments designed for long-term family living are also needed, according to the society, which warned that half of the 80,000 new houses required over the next five years will be needed in the capital.