Quotes from property chiefs

Aidan O'Hogan President, IAVI

In its pre-budget submission, the IAVI is seeking significant changes in stamp duty, no further national taxation on development land, the reintroduction of rollover relief for farmers whose land is acquired by compulsory purchase and continued and increased investment in major infrastructure projects.

On stamp duty, we are looking to the minister to revert, for a period of at least five years, the duty on commercial transactions to 6 per cent, down from the very penal rate of 9 per cent which he introduced last year.

This 9 per cent rate is encouraging Irish investors out of Ireland, is a deterrent to outside investors entering the Irish market, is creating an avoidance culture by the use of SPVs (special purpose vehicles) which only attract one per cent duty, and has reduced the value of most properties held in all our own pension funds by almost 3 per cent.

On residential stamp duties we are looking for a reduction in the number of different rates applying to owner occupiers from 7 down to 4, and an increase in the thresholds/bands at which the various rates apply, reflecting the reality of what has happened to house prices in the last few years and so as to encourage more supply into the market which increased volume will ensure increased overall revenues from stamp duty.

The lack of rollover relief for farmers whose land is compulsorily acquired is a major problem and is leaving them at a significant loss in attempting to put themselves back into the same position after the CPO as before - no better - no worse.

We are therefore asking for rollover relief to be restored in those circumstances.

We are seeking no further direct national taxation on building land because we believe this would reduce supply and thereby increase prices.

Instead we are encouraging much higher levies for infrastructure connections to be payable to the local authorities.

Finally we are urging the minister to continue and increase investment in the major infrastructure projects and to recoup the cost of these through planning levies.

Michael Webb

Managing director

Davis Langdon PKS

It is essential that minister McCreevy holds his nerve on capital investment.

When the pressure is on government spending, it is all too easy to cut capital investment while allowing current expenditure to grow. Continuing capital investment is needed to ensure that the Irish economy continues to grow and be competitive.

The recent ESRI report shows that NDP investment has shown a 14 per cent return on the investment. Capital investment in education and research is just as important as capital investment in roads and transport.

The ESRI and others have argued that capital investment does not always deliver value for money.

This may have been true in recent years when construction inflation was rampant. It is not true today when construction prices are declining - the Davis Langdon PKS Tender Cost Index will show a 4 per cent decline in 2003.

Better cost control is needed on all construction projects. The techniques that quantity surveyors have developed to deliver value for money on hospital and office buildings must also be applied to roads and infrastructure projects.

Working in partnership, quantity surveyors and engineers can deliver more effective cost control and value for money on infrastructure projects.

Matt Gallagher

Chairman

Irish Home Builders

I would hope that minister McCreevy would make very little change in his upcoming Budget in December.

The housebuilding industry has suffered too many legislative and taxation changes in recent years.

Having said that, the changes I would most like to see are: a reduction in stamp duty from 9 per cent to 6 per cent and a comprehensive review of stamp duties generally; no change in VAT; an extension of various urban schemes from December 2004 to December 2005, which would help to prevent an inflationary bubble in construction next year; infrastructural spending, which helps to increase the supply of serviced building land.

Gus MacAmhlaigh

Chief executive

Irish Pension Fund Property Unit Trust

The increase in the rate of stamp duty for non-residential property in last December's Budget from 6 per cent to 9 per cent sent shock waves through the property industry.

There was a general feeling of incredulity in the pension fund industry at the short- sighted attitude of the Department of Finance which no doubt raised the rates in the hope of raising extra money for the exchequer. Efforts were made after the Budget to get the minister to think again and it was felt that some account of the special position of pension funds would be taken in the drafting of the Finance Bill. However, we were disappointed.

We would now urge the minister to think again and address the issue in this year's Budget by bringing back the rate of 6 per cent for ordinary property transactions. We would also ask the minister to introduce a new rate of 0 per cent for pension funds.

This zero rate already applies to property purchases by charities, many of whom rely on property unit trusts to buy and manage property on their behalf. A zero rate would also be consistent with the fact that most pension fund property unit trusts are not subject to corporation tax and are exempt from capital gains tax because of the status of their unit holders.

In any case, the current 9 per cent rate of stamp duty is a penal rate of double taxation that runs counter to the minister's philosophy of encouraging people to invest in their own pensions.

Rory O'Donnell

Managing partner

O'Donnell Sweeney,

Please reduce the rate of stamp duty back to 6 per cent. You are driving capital out of the country.

Please review the provisions brought in over the last few years to combat what the Revenue regard as avoidance of VAT.

They have created a nightmare for people dealing with perfectly normal property deals. It would not cost money to sort this out.

Please do not increase the VAT on new houses or, if you must, would you ever introduce them by way of transitional arrangements that will avoid the appalling problems created for housebuyers throughout the country by the manner in which last year's 1 per cent increase in VAT was introduced.

Jim Clery

Tax partner, KPMG

There are two measures that I believe should be urgently addressed in Budget 2004.

The first is a need for the minister to extend the final closing date for the transitional urban renewal projects which are underway at present. The minister has shut down most urban renewal tax incentives by requiring that 15 per cent of the project was undertaken by a certain date.

Unfortunately, he has artificially set a closing date to complete these projects by December 31st, 2004. Given the delays in the planning process and the general legal complexities of these projects, many projects are significantly behind plan.

The rush to complete these developments by December 31st, 2004 could result in poor quality construction or, perhaps worse, a failure to undertake these major rejuvenation projects. Now that the minister has closed off the relief he should allow substantially more time to finish these developments.

I also believe that the rates of stamp duty on both commercial and residential property in this country need to be re-evaluated. Transaction costs of 9 per cent represent a deadweight drag on the economy which will ultimately be translated into less activity and greater market distortion. If the United Kingdom can operate on a stamp duty rate of 4 per cent, then we should be able to do likewise.