New survey shows access to finance and input costs such as VAT are the key barriers to increasing housing supply

New survey shows access to finance and input costs such as VAT are the key barriers to increasing housing supply

01 September 2016

Chartered Surveyors say introduction of rent certainty measures have forced private landlords out of rental sector

SCSI calls for reduction of VAT to 9% for houses under €300K and the establishment of a finance agency to support house building

Society also wants residential investors to be treated on par with commercial property investors

Wednesday 31 August 2016. A new survey has found that the key barriers to increasing housing supply here are access to viable levels of development finance, input costs such as VAT and the provision of infrastructure to ‘have ready to go sites available’.

Over half of the 300 Chartered Surveyors who took part in the survey said the introduction of rent certainty measures by the government was one of the main reasons private landlords are exiting the sector. The other reasons cited were the indebtedness of private landlords and tax restrictions.

The survey was carried out last month as part of the Society of Chartered Surveyors Ireland Budget 2017 submission.

The President of the SCSI, Claire Solon said that reducing VAT on affordable housing and establishing a Development Finance Agency with expertise in construction lending were measures the government should introduce in the upcoming Budget.

“The ESRI has estimated that Ireland needs to build 25,000 residential units per annum, with the bulk of them being required in the capital. However in Q2 planning was only granted for 2,590 units in Dublin, of which only 620 have commenced construction.”

“The VAT reduction for the hospitality sector has worked extremely well. We would like to see a similar reduction to 9% for a defined period focusing on houses under the €300K price point. We feel such a move, access to finance for builders and a Capital Gains Tax ‘holiday’ for a set period to free up development land, are three measures which would provide a much needed kick-start to house building” she said.

Ms Solon said the return of boom era rents – caused by the shortage of housing supply - together with the slow gearing up of the construction sector meant Ireland might not be in a position to avail of any opportunities created by Brexit unless swift action was taken.

“It is crucial for the Government to address the depletion in investor activity in the overall residential market. One solution would be to apply the principles of commercial property investment to residential development and investment. Specific measures which would help level the playing field would be to reinstate full mortgage interest relief and to remove USC and PRSI on rental income” Ms Solon said.

The survey found that the most significant challenge facing provincial towns and villages in Ireland was the inadequate provision of broadband services. In its submission the SCSI calls on the Government to provide additional funding for the roll out of reliable, high speed broadband services in all rural and provincial areas, a doubling of the Town and Village Renewal Scheme Grant Scheme to €20m and an overhaul of the regulations of the Living Cities initiative.

The Society has warned of the serious skills shortages facing the sector and has called on the Government to commit a greater proportion of the National Training Fund to up skilling, retraining or transferring of workers into surveying disciplines while also allowing employers to access the fund directly.

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