Changes in taxation may curb soaring price of houses

The Government has approved a package of measures, believed to include taxation changes, designed to curb soaring house prices…

The Government has approved a package of measures, believed to include taxation changes, designed to curb soaring house prices and calm the property market.

The details will not be announced until Thursday or Friday to allow the relevant Government departments time to prepare to implement them.

The plans, agreed yesterday at a day-long Cabinet meeting, are understood to include a number of sensitive taxation changes which will reduce the attractiveness of investment in residential property.

It is hoped that this will redress the situation whereby private investors, encouraged by generous tax breaks, are pricing potential owner-occupiers out of the market in certain areas.

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The changes are also expected to include a scheme to encourage private investors to fund the provision of sewerage and water services to land zoned for housing but undeveloped. This incentive is aimed to encourage more house-building, thus easing the current shortage of homes.

The package is based on the recommendation of a report commissioned by the Government from economists Peter Bacon and Associates into spiralling house prices. The report and its recommendations will be published later this week along with the Government's package.

Other measures under consideration are understood to include changes in stamp duty and the possible introduction of rates on properties owned by investors.

The Taoiseach is understood to have taken a personal interest in the issue and to have pressed for a quick Government decision. Ministers are concerned that high house price rises may ultimately feed into inflation figures. There is a strong awareness in Government circles that the price of houses is seen as a most pressing issue among the predominantly middle-class floating voters.

Democratic Left has called for the publication of the Bacon report so the public and the Dail can see it before decisions are taken. The Institute of Professional Auctioneers and Valuers called on the Government to ensure there were continued incentives for investors in housing.