Savills: Govt must reduce VAT on new houses

An international property advisor is calling on the Government to reduce the VAT on new homes to help stimulate building.

Savills latest report on the Irish housing market says new mortgage rules will mean an increase in demand in the rented sector.

However, the shortage in supply of suitable housing means that rents will continue to rise both in Dublin and commuter counties.

The group says Ireland needs about 25,000 news houses a year, but at the moment we're only getting 11 thousand.

Director of Research at Savills John McCartney explains how lowering VAT will help, saying: "It would mean that developers would be able to build more schemes on a profitable basis.

"The problem at the moment is that a lot of schemes aren't profitable, the builders can't develop them and sell them at more than the cost of construction.

"If you reduce the costs associated with building housing schemes, then more developers are going to be able to build them and make a profit, and they're not going to do it if they don't make profit."