CIF publishes Six steps to increase housing supply and stimulate  growth in the economy

According to the Construction Industry Federation (CIF) If 10,000 more housing units are built per year,  an additional 25,000 people will be employed in the construction sector. This would also  restore residential construction activity to levels needed to meet the growing  high levels of demand.

The CIF have proposed six steps for inclusion in  October’s budget, aimed at increasing levels of house building as well as  stimulating further recovery in our economy.  CIF has called on the  government to implement the following policies in the upcoming budget:

–          Introduce a  ‘Help to Buy Scheme’ to assist first time home buyers.
–          Introduce a tax incentivised  savings scheme for future purchasers of new homes.
–          Replace Part V – social  housing obligations for new developments- with a 1% levy on sales of all  residential units.
–          Introduce a temporary VAT rate  of 9% for residential construction for a two year period.
–          Restoration of 100% tax  deduction on the interest expense incurred on loans to investors in  residential property.
–          Reduction of Capital Gains tax  to 20%.

The current housing crisis is a complex situation.   It is widely acknowledged that the house building industry must increase  drastically the current levels of house building.  The ESRI estimates  that 25,000 units must be built every year in order to meet demand, but at the  moment we’re only building in the region of 11,000 per year. Shortage of new housing is a key factor contributing to house price inflation, and rental  inflation due to the construction industry not being in a position to fund  recovery of construction activity to the required levels.

Speaking about  the plan, Tom Parlon, the Director General of the CIF said: “As both the  economy and the construction sector recover, these are the key challenges that  must be addressed in order to maintain growth in the economy.  The  provision of homes requires input from our industry first and foremost to  construct enough houses to meet the demand.  This can only be achieved  however with a supportive regulatory and policy environment from our  Government.

“In demographic terms, population growth is predicted to reach  600,000 between now and 2031, 60% of which will need to be accommodated in the  greater Dublin area. Ireland needs buildings and infrastructure to support its  economic growth, support continued foreign direct investment and maintain the  country’s economic competitiveness in stimulating further growth.

 

 

“We must  look in detail at the impediments that are affecting recovery of construction  activity and the ability of builders to build, the ability of purchasers to  purchase, and the ability of renters to rent. We need a sustainable solution  to the current impasse where construction activity, particularly in the  greater urban centres, is less than half of the level of activity that is  warranted as we speak.

“We need to address the basic question of  who is going to be able to afford to build and who is going to own the new  buildings that Ireland as an economy needs to support its continued economic  growth” he concluded.

Some of the other proposals in the  pre-budget submission are heavily focused on the Public Capital programme, and  on stimulating interest in construction careers and  education:

·         Significant increases in the public capital  programme
·         Extending the State contribution to final bidders’  costs for Public Private Partnerships (PPPs) to all PPP  competitions.
·         Rebate of statutory Redundancy Payments to newly hired  construction workers.
·         Extend the JOBSPLUS scheme to the ‘Wet Trade’  apprenticeships.
·         Removed current student levy on  apprentices.
·         Financially support the work of the Construction Safety  Partnership (CSP).
·         An ‘opt in’ facility for Class S PRSI contributors to  include entitlement to jobseeker’s and illness benefit.

www.cif.ie