€10,000 levy plan for new homes

LOCAL authorities are considering introducing a 10,000 levy on all new homes which would push up the price of an average house by at least 4%.

However, this figure would go even higher as solicitor fees, stamp duty and VAT are all charged on the total price of a house.

It also comes on top of the government’s take on the price of a house with an estimated one third of the cost of a new home accounted for by various taxes including VAT, stamp duty, tax on materials and income tax on labour costs.

Any attempt to hike up the cost of new homes is likely to promote outrage from buyers and builders at a time when the cost of an average Irish house has soared to €250,000.

Dublin’s four local authorities are looking at ways of funding infrastructure and a tax on each new home is one of the possibilities being explored.

Although Dublin’s councils are the first to develop levy proposals, other local authorities around the country are expected to follow suit.

Dublin city manager John Fitzgerald confirmed the City Council was looking at introducing such a levy.

“We are looking at charging so much per house or so much per square foot of all developments but it is far too early to talk about any sort of numbers.

“At the end of this we might recommend no change or we might recommend the introduction of a new levy. If we did have an increase, it would have to be transparent, it would have to be justifiable.”

The council has commissioned a report from Deloitte & Touche to research methods of raising funds for infrastructure and it is understood the consultants have suggested a €10,000 levy.

The report is nearly completed and will be presented to City Managers.

The levy would be charged on planning permissions which would mean developers would be liable for the costs but ultimately, it would be passed on to buyers.

Mr Fitzgerald said a charge may be necessary to fund infrastructure for new houses. “It is a balancing act to make sure new houses have proper infrastructure.

It is an attempt to out some kind of structure on houses which need these facilities. It will take at least a year before anything is introduced.”

Dublin Mayor Dermot Lacey said yesterday he was completely opposed to any move that would push up exorbitant house prices.

“A bald €10,000 charge on every housing unit is not on,” said Cllr Lacey.

“I don’t see how it would be justifiable to impose a levy on a traditional house. It would be very hard to persuade me of the justification of such a case. Our targets and our aims should be to bring down the cost of a house not to increase it.

“I don’t support it being used to fund infrastructure. There are ways in which local government infrastructure could be improved. there may be a case for development levies for developments.

"If we are looking for money for infrastructure, maybe we should look at the SSIA accounts or the unnecessarily large amount being put into the National Pensions Reserve Fund. There are other ways to fund local government without targeting housing. We should be trying to reduce cost.”