Builders call for VAT cut on new homes to ease housing crisis

Government should cut VAT on new homes, tackle water supply shortfalls and boost planners’ resources, builders say in their pre-budget shopping list.
The Republic needs 50,000 new homes a year to house its growing population, the Construction Industry Federation (CIF) notes in a submission to Jack Chambers, Minister for Finance, in advance of his first budget in October.
The federation says Government should cut VAT on apartments sold to private buyers to zero, which would make building them more viable by encouraging more people to buy these properties. Similarly, it should cut VAT on new houses to 9 per cent, making them more affordable, as the tax is passed on to purchasers, says the CIF.
The building industry lobby group adds that this could have a “significant impact on housing delivery”.
The federation highlights concerns recently raised by members over the resources given to State water utility, Uisce Éireann, to build new treatment and waste facilities needed for new homes.
Government needs to support house building by providing Uisce Éireann with adequate cash over multiple years to cut uncertainty over its ability to provide those services and “ringfence” funds for critical projects, says the CIF submission.
Builders want extra cash for planning appeals board, An Bord Pleanála, to ensure it has the staff and other resources it needs. The submission acknowledges recent Government pledges to increase the board’s resources but warns that they do not go far enough.
“These will still not be able to address the backlog in planning applications that are needed to deliver housing needs over the coming months and years, or meet higher housing targets in the future,” it says.
Government “urgently needs” to increase investment in the overall planning system to support not just housing, but growth, climate action, job creation and protecting the environment, the federation argues.
Local councils now need more staff to handle the increased workload since new rules shifted responsibility for large-scale housing developments back to them from An Bord Pleanála, it maintains.
Similarly councils and the courts must have enough resources to deal with legal challenges to planning decisions.
“Many planning decisions are legally more complex, which causes a delay in the decision-making process and associated costs,” the CIF says.
With working from home on the rise, builders recommend that planning law should be changed to ease change of use from commercial to residential for unwanted offices. The federation adds that the State’s Housing Commission recently recommended that vacant offices be converted to homes.
Similarly, Government should offer developers tax incentives to switch sites bought for commercial building to housing. This could encourage the redevelopment of land where it would otherwise be too costly to build new homes, says the CIF.