Call to index-link first-time buyers' grant

The Government has been urged to index-link the first-time buyers' grant in line with new house prices in the Budget. It has also been warned that the grant's retention is crucial to the well-being of the construction industry. In a pre-Budget submission, the Irish Home Builders' Association (IHBA) also calls for the grant to be extended to refurbished buildings which are redeveloped for residential purposes.

The group says the housebuilding industry is expected to generate an estimated total tax yield of £886 million this year. It says this compares to just under £150 million which it costs the Exchequer for housing supports, most notably mortgage interest relief and first-time buyers' grants.

In its submission it argues that under existing arrangements it is difficult for refurbished dwellings to compete with new units because they do not qualify for the first-time buyers' grant and purchasers must also pay stamp duty and VAT.

"Moreover, although not all refurbished buildings are Georgian buildings, the current policy on refurbished buildings does not fit within the Government's proposed policy for the refurbishment of Georgian buildings as residential spaces.

"If the housebuilding cycle is not interfered with by any adverse changes in housing policy, the tax yield from the housebuilding industry could well reach the £1 billion mark in 1998," it forecasts.

The IHBA also calls on the Government to implement Private Finance Procurement initiatives in the development sector, "thus enabling the private sector to play a role in the financing and provision of the infrastructural developments required to release more residential zoned land."

It says concerns about escalating house prices would thus be alleviated as the provision of more infrastructure would allow more residential development to take place.

The organisation said it would welcome an input into such a scheme and wants a committee set up to co-ordinate all capital expenditure on water supply and drainage schemes to decide what schemes would warrant private sector funding and what specific funding requirements should apply in each case.

"The IHBA considers some favourable tax treatment might be required initially to encourage pioneers in this area," it says.

The IHBA warns that it is particularly important in the run-up to EMU that the Government maintains a stable monetary and fiscal environment over the next 18 months. "To sustain economic growth and maintain consumer and investor confidence at a high level, the Government should ensure in the forthcoming Budget that corporation tax and income tax rates are further reduced," it says.

On the issue of tax-designated areas, it says it would welcome an extension of the existing tax relief scheme for designated resort areas to other tourist areas, not necessarily located along the coastline, "thus ensuring further benefits for Ireland's growing tourist trade".

It also urges the Government to extend the current designation period for resort areas beyond three years.

The IHBA says it estimates that the housebuilding industry employs 46,000 people directly, or almost 50 per cent of the total construction employment. It says a further 18,000 are employed in ancillary activities.