Calls to cut Vat to tackle acute lack of homes

Property Industry Ireland (PII) has called for the Vat rate on houses to be cut from 13.5% to 9% for two years in order to address the “acute” lack of supply of affordable owner-occupied, rental, and social housing.

PII director Peter Stafford said Ireland has been building less than half the number of houses needed to keep up with demand. “This year, as in previous years, we will miss the target,” he said.

“Dublin currently needs about 5,600 new houses per year, rising to 8,900 in 2018, but last year the actual supply was under 2,800 units.

“The only long-term solution to the lack of affordable, quality housing in parts of the country, particularly Dublin, is to significantly increase supply.

“A failure to provide the right number of houses in the right location will simply increase prices and rents, and erode the quality of life of people trying to find a home.”

He said Central Bank mortgage rules were having a significant impact on housing affordability, and called for decisive action to be taken to improve viability of new housing development.

“Issues such as Vat, regulatory costs, and planning delays need to be reformed to boost supply,” he said.

Ibec, which represents businesses working in the property and construction sector and with which PII is associated, has launched its budget submission. As well as the Vat cut, it called for the Government to increase capital investment in social housing in the budget.

“Unused or surplus government-owned land should be sold and the income ring-fenced for building social housing,” said Mr Stafford. “This would provide an immediate cash injection into the State’s social house-building programme at a time when it is needed most.”

The group also wants local authorities to be compelled to rule on planning applications for housing developments and social housing projects within six weeks of receipt of the application.

It says a special An Bord Pleanála unit should be set to hear and determine appeals on housing developments within a further six weeks.

“This would mean that high-quality, affordable, and well-developed housing projects would not get caught up in bureaucracy but could proceed to construction following a rigorous, efficient planning determination,” it argued.

It also wants the Government to address the rising demand for student accommodation by encouraging investment in purpose-built student halls of residences in areas where demand is greatest: “This should include making student housing a separate property type in planning and design regulations to encourage development of halls of residences in brownfield or under-developed urban areas.”

In the commercial property sphere, Mr Stafford said IDA Ireland should again, “on a very selective basis”, be allowed to enter into pre-lettings of offices suitable for major foreign investors”.

“We currently risk losing major new investments because we don’t have the appropriate office space available,” said Mr Stafford.

PII is also seeking:

  • Support for the conversion of unused retail units in town centres to residential use, especially those on the ground floor, which would provide accommodation for people with disabilities;
  • A review of Central Bank mortgage lending rules to allow “policy responsiveness” to price changes, housing availability, and affordability throughout the property cycle.


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