The supply of housing could double within 2 years if the Government were to follow 7 simple steps, according to the CIF.
The CIF has suggested that these measures could see 20,000 housing units built a year by 2016, curtailing the excessive prices rises in the Dublin housing market.
The 7 steps proposed by the CIF are:
1. 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.
2. Replace Part V development contribution for social and affordable housing with a 1% levy across the sales of all housing – new and old.
3. Introduce a temporary 9% VAT rate for residential construction.
4. Create a special development finance fund.
5. Establish a ‘Help to Buy’ scheme
6. Create a tax incentivised special savings scheme.
7. Restore full interest relief for investment in residential property for letting purposes.
This year it is expected that 10,000 housing units will be built nationwide. This is despite the Government and the ESRI stating that 25,000 units need to be built every year.
Speaking about the plan, the CIF’s Director General Tom Parlon said, “Everyone knows there is a supply issue when it comes to housing in this country. We’ve had so little building taking place over recent years that there simply aren’t enough houses to meet the demand. If these 7 steps were followed it would have a transformative impact on house building in this country. 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.
“Some of the measures would greatly 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. Why should this tax be specifically geared only towards new housing as is currently the case?
“We also believe that the Government should look at some measures to help house buyers. They could extend the availability of the property tax rebate for purchasers for the first 5 years of occupation. For a limited period they could also give a partial rebate of development levies to home purchasers when they buy a new house. This will make new housing more affordable and encourage more people to buy new houses and apartments.
“In terms of getting more builders on site, another step would be to introduce a special fund providing development finance. This would help smaller builders to deliver units in key growth areas and could support the construction of up to 5,000 units.”
The proposals are included in the CIF’s Pre Budget Submission to Government. The submission also contains a range of other measures aimed at boosting employment in the sector and growing construction activity.
Some of the other proposals include calls to:
- Extend the Home Renovation Incentive limited to €50,000, while also prolonging the lifetime of the scheme.
- Revise the apprentice training programme to encourage more people to pursue apprenticeships by combining phases 1 & 2 into a non sponsored route.
- Activate the Living City initiative.
- Abolish the special tax rate on the rezoning of land.
“The Government has made it clear that they want to see the construction sector grow and to double in size over the coming years,” said Mr. Parlon. “Achieving that target will require action to encourage construction activity. If we want to see more construction in this country then policies will have to be implemented and funding provided. How serious the Government is about growing our sector will be seen in the forthcoming Budget. Only then will we know if there is meat behind the Government’s construction strategy,” Mr. Parlon concluded.