Housing and the budget: Range of measures including €500 tax credit for renters and levy on concrete for mica redress

Budget 2023: Renters, prospective buyers and landlords see a boost; second homes hit for triple tax rates and owners of unused zoned land to pay a levy

The 400,000 renters who do not receive any other State housing supports will qualify for a new €500 tax credit, according to Minister for Finance Paschal Donohoe, who announced several measures targeting the housing crisis.

The Minister also extended the Help-to-Buy scheme at current rates until the end of 2024, saying 35,000 people had already benefited from it. Government consultants have called for the scheme to be withdrawn after 2024.

Before the war in Ukraine intensified inflation, housing was long acknowledged to be the Government’s single biggest challenge after the coronavirus pandemic. In his budget speech, Mr Donohoe said “hundreds of thousands” of homes will be required in the next decade to meet the demand for social, private and rental accommodation”.

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In a budget cast against the backdrop of rising rents and tight supply in the rental market, the Minister said the €500 rent credit was aimed at tenants who do not receive any other housing supports. The permanent cost of the measure is €200 million annually; renters will avail of the credit through Revenue. The measure will formally kick in from 2023 but renters will also receive a credit for 2022.

“The credit will be claimable ‘in year’ in 2023 and in subsequent years and from early in 2023 in respect of rent paid in 2022,” said the Department of Finance.

“Only one credit may be claimed per person per year, however it is proposed that the value of the credit will be doubled in the case of married couples and civil partners.”

Minister for Housing Darragh O’Brien described the new rent credit as a “good permanent change”, telling reporters at Government Buildings that he expected renters would claim the credit directly from Revenue online.

“I would also expect – and this needs to be confirmed – that that would be on the basis of a registered tenancy yes, and they will claim it on the basis of the registered tenancy number that they have,” he said.

“This is a fundamental change to ensure that renters are helped and assisted – and also it’s coming in with what is in 76 per cent of our tenancies we have rent pressure zones and there’s 2 per cent rent cap in place there.  So it will not have inflationary pressures in that space.”

Mr O’Brien dismissed critics who said the measure was insignificant, saying it was putting “real money” in people’s pockets. “We’re looking at effectively €400 million in assistance for renters.”

Meanwhile, the Minister tripled the Local Property Tax rate on homes left unoccupied for 12 months or more, though it will not raise more than €3 million next year. “A property will be considered vacant for the purposes of the tax if it is occupied for less than 30 days in a 12-month period,” said the department.

Exemptions to ensure owners are not “unfairly charged for temporary vacancy arising from genuine reasons” include: homes recently sold or listed for sale or rent; properties vacant due to the occupier’s illness or long-term care; and properties vacant due to “significant” refurbishment.

In a bid to encourage small landlords to stay in the business, Mr Donohoe doubled the sum they can claim against taxes in pre-letting expenses to €10,000, with the qualifying time for such expenses being incurred halved from 12 to six months

The measure comes after 1,709 notices to quit were issued to tenants this year by landlords selling up.

Clarie Neary of estate agents Savills Ireland said the increased relief was welcome but it was “not enough” to encourage landlords to stay in or return.

In an effort to pay for part of the €2.7 billion mica redress scheme, there will be an annual €80 million levy on the price of concrete blocks, pouring concrete and certain other concrete products. The levy will be applied from April, set at a rate of 10 per cent of the cost of the concrete product excluding VAT. If the scheme continues for 10 years and the levy applied throughout that time, the new charge would potentially contribute €800 million to the cost of redress. The Society of Chartered Surveyors Ireland said the levy will challenge the viability and affordability of new homes at a time of significant construction inflation.

The residential development stamp duty refund scheme introduced in 2017 will continue until the end of 2025, whereby developers pay less stamp duty if they build on lands bought as agricultural land. Usually, buyers pay a 7.5 per cent rate, but only 2 per cent under the scheme. So far, 15,000 homes have been built on such lands.

The Living City initiative has been extended until the end of 2027, offering tax reliefs to convert residential and commercial properties on streets in Dublin, Cork, Galway, Kilkenny, Limerick and Waterford. Owner-occupiers will be able to claim accelerated tax allowances over seven years, not 10.

A 3 per cent annual tax on serviced lands zoned for homes will apply, once proposed changes to the plan are set out in the Finance Bill. Local authorities will publish maps showing the lands affected on November 1st, said Mr Donohoe. Landowners will be able to challenge the maps afterwards.

Arthur Beesley

Arthur Beesley

Arthur Beesley is Current Affairs Editor of The Irish Times