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PII Pre-Budget 2020 Submission

While there are many concerns facing the Irish property market, we have addressed our recommendations for Budget 2020 around four broad themes that we believe are most urgent:
  1. Certainty for the Property Market and Housing System Emergency
  2. Accessible Housing for All: Increased Supply of Affordable Accommodation
  3. Improved Environmental Performance of Existing Housing Stock
  4. Supporting a Functioning Private Rented Sector

The forthcoming budget, as regards Irish housing, is just one element of the complex jigsaw that requires to be put together in order to solve our most profound housing crisis. The limited provision of social housing, excessively high rents and restricted access to mortgages is currently combining to create a socially regressive society. The housing crisis is potentially a much greater crisis than the possible challenges Brexit might bring. The view of Property Industry Ireland is that the housing crisis could be a 20-year crisis, beginning at the end of 2006 and lasting at least until the middle of the next decade. The orthodox view that the resolution to the housing crisis is going in the right direction is incorrect. The forthcoming budget will not, in itself, solve the crisis, but is nonetheless an opportunity for the Government to show that it has the courage to use the power of a compassionate State.

Both the public and private sector have a responsibility to look for fresh angles, challenge conventional thinking and to work together to identify solutions rather than to simply identify problems and obstacles. This budget submission is written in a constructive vein and while all industry bodies ‘go through the red door with something to declare’, paramount in our thinking has been the public interest and a young generation who are disenfranchised from housing. Furthermore, it is this young generation that has helped attract inward investment of significant scale, which in turn has led to burgeoning corporate tax receipts.

We are hopeful that the Minister, in his budget speech, will provide the inspiration required to give a lead in terms of cross-sectoral collaboration and introduce imaginative, carefully thought out measures, to create much greater momentum to affordable house supply.

Summary of Recommendations

  • Measures announced in Budget 2020 should support the viability of housing delivery to ensure an increase in the supply of all tenures; owner-occupation, rental and social, to facilitate housing that is accessible to all, affordable and sustainable.

Certainty for Property Market and Housing System Emergency
  • Property Industry Ireland calls on Government to ensure that there is certainty for the market in its property taxation policy, including a commitment not to increase current stamp duty rates for property transactions. The Minister should announce in his Budget speech the long-term commitment to policies which support housing delivery and among those policies is that of certainty in relation to stamp duty rates.
  • In recent years Government has launched or announced a range of market interventions to address the housing emergency. Some of these have not had the opportunity to fully develop or realise their impact on the market. PII recommends:
    • a commitment by Government to the retention of the Help-to-Buy Scheme to stimulate housing supply, and provide for a reasonable ‘pipeline’ of supply in response to this supported demand,
    • further commitment and funding to the Rebuilding Ireland Home Loan for affordable home ownership for low- to mid- income households, and
    • Government urgently provide further clarity on the Land Development Agency and Home Building Finance Ireland and their role in stimulating a market response to the housing supply need.

Accessible Housing for All: Increased Supply of Affordable Accommodation

Supporting Home-Ownership

  • In advance of the Budget 2020, Government should announce the retention of the Help-to-Buy scheme. PII call for the Help-to-Buy scheme to be extended to 2025, with an on-going monitoring of supply and demand levels, and the purchase value limit.

Cost of Development of Homes
  • Apply a reduced rate (9%) of VAT on all new homes sold to support affordable housing development.

Cost of Construction and Skills
  • Introduce tax measures to encourage more apprenticeships, including the introduction of a scheme, along the lines of the Revenue Job Assist initiative, for the lifetime of all apprenticeship placements to encourage the take-up by employers of apprentices and attractiveness for students.
  • Introduce a short-term measure of funding for vocational or third-level courses in a property-related disciplines to facilitate lower fees/greater grants for students undertaking these courses to address the critical shortfall in skills.
  • Introduce a returning home moving expenses allowance for Irish nationals returning to Ireland and working in a construction industry sector where there is a skills shortage.

Incentive and Punitive Policy Initiatives to Lower Land Cost
  • Introduce a carrot and stick policy to lower land costs:
    • Incentivise land to come to the market by introducing an exemption from Capital Gains Tax for a time-limited period, applicable to land in designated locations, under strict criteria.
    • Introduce a double tax allowance for relocation costs for businesses due to disruption.
    • Amend legislation to penalise landowners who use sites for a purpose for which it is not zoned by amending legislation to strengthen Compulsory Purchase powers for residential-zoned lands, applicable to land zoned for residential or mixed-use development, by introducing a short-form CPO for such lands under strict criteria

Improved Environmental Performance of Existing Housing Stock
  • Re-introduce a Home Renovation Incentive scheme for energy performance renovations for dwellings for owner-occupiers. For rental properties, to increase supply, this should be made available as a credit against tax for new supply registered with the Residential Tenancies Board.
  • A clever and responsible time-limited tax incentive package should be actively considered to modernise/convert buildings in towns and villages into residential living space
  • In terms of plant fixtures and furnishings in rental dwellings, allow the cost to be written off over 1 year for energy efficient purchases e.g. replacement of plant fixtures with more efficient ones.

Support a Functioning Private Rented Sector
  • reform the taxation of the private rental market to incentivise the retention of dwellings as rental properties. A range of measures should be considered that together reward those landlords who continue to provide accommodation at affordable rates, such as:
    • rental properties sold with current tenure unaffected should be exempt from stamp duty;
    • introduction of an exemption from USC and PRSI, on property-related earnings for private landlord owners who charge affordable rents.
    • introduce the option to charge VAT on rent in residential.
    • allow the cost of plant fixtures and furnishings in rental dwellings to be written off over 5 years rather than the current period of 8 years.
    • allowing a taxpayer to claim the cost of acquisition, new build, and refurbishments, as a 2% straight line deduction against taxable rental profits over 25 years for affordable rents.
  • where a dwelling is rented under the Fair Deal scheme, rental income and asset should be exempted from financial assessment due to social benefit and avoid the property being left vacant.
A €3m advertising campaign via radio, tv, newspapers & social media, to promote ‘rent a room’ scheme should be undertaken.
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