Builders say temporary VAT cut would boost house construction

A temporary cut in VAT on new homes would help kick-start building in areas facing a housing shortage, said Construction Industry Federation (CIF) director general Tom Parlon.

Speaking after the CIF conference yesterday, Mr Parlon said areas such as Dublin face a crisis in housing supply. “In the last three years, house-building has been less than pre-1970s levels,” he said.

He added that house prices only recently climbed back to a point where it is viable to build.

However, he said VAT and other taxes mean the Government’s take from house sales can be as much as €30,000.

Mr Parlon said the decision of Minister for Finance Michael Noonan to cut the tourist industry's VAT rate has boosted the hospitality sector. "He should introduce a similar reduction at the housing side," he said.

His organisation is wants the rate on new homes cut to 9 per cent from 13.5 per cent for two years.

Four portfolios

Meanwhile, National Asset Management Agency chief executive Brendan McDonagh, told the conference it will put four portfolios on the market in the final quarter of 2014.

He said the sale will involve "€600 million worth of product". This includes debt secured on office blocks on Dublin's Grand Canal Square, shopping malls within and outside the capital and, as reported in The Irish Times, eight hotels around the Republic.

Opening the conference, CIF president Philip Crampton said social housing could be paid for through a 1 per cent levy on all residential property purchases, which could be ring-fenced.

“Last year a levy of this nature would have created a fund of €60 million for social housing,” he said, substantially more than the amount raised by the current system.

Mr Crampton said the CIF estimates such a levy would raise €75 million this year.

Junior Minister at the Department of the Environment Paudie Coffey ruled out such a measure.