Committee calls for profit limit for housebuilders

The Oireachtas committee on housing has called for the Government to place limits on the amount of profit that developers can make from building houses.

The draft report of the committee makes a series of proposals including a review of the Central Bank rules for first-time buyers and increasing rent supplement.

The report is to be considered as new figures show the Department of the Environment’s capital spend is 56 per cent below target for the first five months of the year.

Fianna Fáil's spokesman on housing, Barry Cowen, said the statistics, released by the Department of Finance, warranted an immediate response by Minister for Housing Simon Coveney.

“The country is in the midst of a housing crisis and the department is not spending the money available to them,” Mr Cowen said.

“It is baffling. Really we should be increasing our capital spend to deal with the difficulties in the market not reserving over half of the monies available to us.”

The department said this reflected a pattern over previous years where the majority of capital expenditure was incurred towards the end of the year.

The Oireachtas committee on housing, which was tasked with identifying solutions to deal with the crisis, makes more than 100 recommendations. The proposals include a review of the Central Bank rules “as soon as possible”, in particular for young people and those who cannot raise deposits for a home.

Alternatively it recommends a deposit savings scheme to be introduced by the Government to assist first-time buyers. It also suggests house assistance payments and rent supplement should be increased. It says this should be backed by legislative safeguards to ensure landlords do not increase rent.

Consumer price index

The draft report, which is to be considered by the committee today, calls for all rent increases to be linked to the consumer price index. Former minister for the environment

Alan Kelly

proposed this last year but was ruled out by the Department of Finance.

The Oireachtas committee also calls for cuts to dole payments for under-26s to be reversed. The report, seen by The Irish Times, suggests incentives on mortgage and tax relief be examined to encourage landlords to release accommodation to rent.

There are a series of measures on how to cut the cost of building a home, including limiting the level of levies charged and “placing limits on the amount of profit that can be made”. It concedes this could deincentivise landlords to build houses.

The committee also recommends the rate of VAT be reduced by 4.5 per cent to 9 per cent on a trial basis to encourage the immediate building of houses. It proposes an alternative retention of the 13.5 per cent rate but suggests the 4.5 per cent difference be ringfenced for social housing and a potential national building programme.