Home builders react angrily to VAT on new housing

The Irish Home Builders' Association (IHBA) has reacted angrily to at the measures announced in today's Budget, complaining that home buyers cannot recover the VAT element on new housing.

"Any increase in VAT will be reflected in the house price. Today's increase equates with an additional cost to the buyer of €2,000 for house costing €200,000 or €3,000 in the case of a house costing €300,000," said Ciaran Ryan, director of the IHBA.

"New housing in the UK is charged a zero rate of VAT. That helps keep the price down for the buyer but in Ireland the government seems intent on increasing the cost to the buyer.

"A recent survey by RTE confirmed that every new house returns the equivalent of 37% of its price to Government or approximately €74,000 for the average house. This would mean that new housing returns in excess of €3bn to government making it by far the biggest beneficiary from new housing construction.

"Today's announcement will ensure that government's take is even greater at the buyers' expense."