Chartered Surveyors describe failure to include supply side measures on housing as a ‘missed opportunity’08 October 2019
Chartered Surveyors describe failure to include supply side measures on housing as a ‘missed opportunity’
SCSI says the increase in commercial stamp duty is a ‘retrograde step’
“Property markets like certainty and once again in a budget, short-term measures seem to have been introduced at the expense of longer-term solutions”
The Government’s failure to include supply side measures in Budget 2020 to help address the rising costs of house construction and improve affordability was described as a missed opportunity by the Society of Chartered Surveyors Ireland.
While the SCSI, which represents 5,000 professionals in the property, construction and land sectors, welcomed the extension of the Help to Buy scheme for a defined period of two years, it said it would have preferred if the threshold for the scheme had been lowered from €500,000 to cover more affordable properties, the original intention of the scheme.
The Society described the increase in commercial stamp duty from 6% to 7.5% as a retrograde step.
The President of the SCSI Johanna Gill said residential and commercial property markets liked certainty and once again in a budget short-term measures seem to have been introduced at the expense of longer-term solutions.
One of the longer-term solutions the SCSI had proposed was a reduction in Capital Gains Tax for zoned serviced residential land for a defined period to help drive down the cost of building new homes.
Ms Gill said that rather than focusing on government inspired demand led initiatives the Society believed it would have been more appropriate - given the seriousness of the housing crisis - to concentrate on supply-side solutions to help drive down the costs of new house building.
“Development land has been increasing in value by double digit figures for several years – we estimate the land costs of a new three-bed-semi is €60K or around 20% of the total cost - and is one of the key elements in the ‘soft costs’ of a new house. This is not sustainable.”
The Society said the increase in stamp duty for commercial property sales was a further example of Government interference in the sector and would cause further uncertainty going forward.
“This increase makes us uncompetitive vis a vis the UK and other EU countries while having a disproportionate effect on the commercial market in the areas that need it most, the towns and villages across Ireland. It also increases the cost on the agricultural land market which is also classified as commercial.”
“This increase, the second in succession, is something of a reminder of the bad old days when there was an over reliance on transactional property taxes. These are an unreliable form of tax and are depended on continuing transactional activity. More worryingly, the total tax intake from Stamp Duty is now the same as 2008 pre-recession levels and this should be a concern.”
The SCSI had stated its opposition to an increase in commercial stamp duty in its budget submission. Instead it called for the sale of large apartment blocks by institutional investors – where residential stamp duty of 2% applies - to be treated as commercial transactions and to be charged at the commercial rate.
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