CIF pointed out that while the Government and the Economic and Social Research Institute (ESRI) have said 25,000 units need to be built every year, it is expected that only 10,000 will be built nationwide during 2014.
It said the measures it was proposing could see 20,000 new units built per year by 2016.
These are to:
- Create incentives for new home purchasers, such as a property tax rebate, a partial rebate of the development levies paid to developers and additional tax allowances for first-time buyers;
- Replace part V development contribution for social and affordable housing with a 1% levy across the sales of all housing — new and old;
- Introduce a temporary 9% VAT rate for residential construction;
- Create a special development finance fund;
- Establish a “Help to Buy” scheme;
- Create a tax incentivised special savings scheme;
- Restore full interest relief for investment in residential property for letting purposes.
CIF’s director general, Tom Parlon, said the supply issue across the country was well known as too little building activity has meant there are not enough houses to meet demand.
“If these seven steps were followed it would have a transformative impact on house building in this country,” he said. “By introducing these measures we believe the country would get a supply of housing fit to meet its needs. It would end the rapid house price rises we are currently facing in Dublin — rises which are likely to continue until we start building sufficient housing for the property market.”
He admitted some of the measures were designed to reduce the cost of house building.
“For example, if the part V development contribution was to be replaced by a 1% levy on all house purchases it would ensure sufficient funding for social and affordable housing, while also reducing the cost to those looking to build and buy new homes,” he said.
The proposals are included in the CIF’s Pre-Budget Submission to Government. It also contains measures aimed at boosting employment in the sector and growing construction activity, including: extending the Home Renovation Incentive limit to €50,000, while also prolonging the lifetime of the scheme; revising the apprentice training programme to encourage more people to pursue apprenticeships; activating the Living City initiative; and abolishing the special tax rate on rezoning of land.