The Society of Chartered Surveyors Ireland has also called for a reduction of VAT on new home building at a time when there is concern about rising house prices and the low level of house building currently being undertaken.
The SCA has published a strategy that is says will ensure there is an adequate supply of houses in urban areas and in Dublin in particular.
The proposals also suggest an exemption on property tax for people trading down, the establishment of a builders' finance fund, and the introduction of a vacant site levy on vacant sites with residential development potential.
The society said the builders' finance fund would help smaller builders and would speed up housing developments of between 15 and 250 units that have slowed down or stalled.
The society also said that if future apartments were designed for family living it would reduce pressure on the supply of traditional three and four bedroom homes.
The Society, which is the professional body for the property and construction sector, said it is concerned about a lack of new homes available at a time when house prices are rising, particularly in Dublin.
The latest house price figures from the Central Statistics Office show that house prices in Dublin are 24% higher than a year ago and the Society says this is simply not sustainable.
Only 8,301 new houses were built in Ireland last year while the Housing Agency has pointed to a need for 80,000 units over the next five years, or approximately 16,000 per annum with half of those required in Dublin.
Chairman of the Residential Group of the SCSI, Simon Stokes, pointed out that new houses cannot be supplied on tap and that the lead in time through construction and to completion generally takes a minimum of two years.
‘Our strategy document focuses on practical steps which can accelerate the delivery of new homes. There is a lack of development finance for builders but the government could address this by establishing a Builders Finance Fund. In the UK a BFF fund of €660 million has been established to help smaller builders and to speed up housing developments of between 15 and 250 units which have slowed down or stalled,’ said Stokes.
‘A reduction in the VAT rate for the hospitality sector worked extremely well here in recent years, boosting the tourism sector and helping to create 15,000 jobs. We believe a reduction in the current 13.5% VAT on new homes to 5% for a period of two years could have a similarly positive impact on house building and job creation,’ he explained.
‘The need to fund infrastructure in advance of a development being completed is a significant barrier to unlocking supply and we believe the creation of a Revolving Infrastructure Fund could address this issue. RIF’s are not grants or subsidies but a smart way of providing financing for developments. Once they’ve been repaid the money can be reinvested to pay for infrastructure on further projects. Together these measures would ensure an adequate supply of houses, kick start the construction sector and create employment,’ he added.
Other measures which the Society believes would be useful are a reduction in development levies paid to local authorities and the index linking of such levies so that they move in line with market changes. A reduction in the windfall tax on the sale of land from 80% to 33% to bring it in line with Capital Gains Tax and the introduction of a vacant site levy on sites of strategic importance could stimulate development, particularly on sites already owned by the
Local Authorities.
The Society also recommended a number of measures which it believes would help reduce the demand for houses. For example a Local Property Tax exemption for people ‘trading down’ to smaller units would increase the availability of second hand homes. This would also happen if greater action was taken by the financial institutions on reducing the number of mortgages in arrears, particularly in the buy to let sector.
Stokes also pointed out that if future apartments were designed for family living this would reduce pressure on the supply of traditional three and four bedroom homes. ‘The current design of apartments is generally not suitable for long term family occupation. We need to move towards the European style which are more suitable for long term habitation, particularly as we move towards more high density schemes in urban areas,’ he concluded.
