Government urged to pass any construction VAT cuts on to buyers

The Government is being asked to ensure any reduction in the VAT rate to encourage more house building would be passed onto buyers.

The housing shortage is leading to increased rents and more people becoming homeless.

Minister Simon Coveney said Ireland would need to build far more than 25,000 homes per year to catch up with demand.

The Government will miss its own deadline for launching its Action Plan for Housing. It was due to be published within 100 days of the Government taking office, but that date now falls during the August break.

The launch will therefore be delayed until September.

Commenting on the delay, Housing Minister Simon Coveney said: "We could launch it at the end of July before everybody heads off on holidays but that is not the kind of momentum we want the project to generate.

"In reality, we will end up publishing our plan at the end of August and moving into September with a really proactive and aggressive work programme to implement it and ensure it works. That is the likely timing at this stage."

NUIG law lecturer Dr Padraic Kenna said there was no guarantee a reduction in VAT for the construction sector would see lower house prices.

He said: "Studies have shown the price of housing isn't really related to any sort of subsidies - it's about whatever can be achieved in the market.

"You could have a reduction in VAT (but) your houses being produced at full market price. So, there needs to be a very clear link for any kind of subsidy like this and the eventual price for the price for it to be effective. Otherwise, it's a waste of money."