Higher Education Authority altered housing recommendations

Proposals for student accommodation report withdrawn after departmental objections

The Higher Education Authority (HEA) was forced to withdraw a series of recommendations to tackle the student accommodation crisis from a key report following objections from Government departments.

The authority, which purports to be independent of the Department of Education and Skills, made a series of taxrelated proposals aimed at incentivising construction of student accommodation in an unpublished, draft report last April.

The document, which has been obtained by The Irish Times under the Freedom of Information Act, underwent significant alterations before it was published by Minister for Education and Skills Jan O'Sullivan last month.

The published version advocated the establishment of an inter-departmental steering group to examine proposals aimed at tackling the shortage of student accommodation, including a possible new tax relief for developers.


However, a series of recommendations initially made by the authority were omitted, including a call for a zero VAT rate on student accommodation, and a Local Property Tax exemption for on-campus bed spaces.

Correspondence obtained under the Act shows that two months after receiving the draft report, the Department of Education wrote to the HEA saying “the recommendations need to be refined”.

The department sought the view of other departments, with Public Expenditure and Reform advising against any concession on Local Property Tax .


“The financing of student accommodation can be done on a commercial basis so the justification for grants is questionable. Similarly where is the justification for LPT [property tax] exemptions when local authority and other social housing is subject to LPT,” the department asked.

It said: “While an increase in on-campus student accommodation should be encouraged/facilitated any extra incentives offered would need to [be] carefully analysed to avoid deadweight/displace- ment.”

A similar view was expressed by the tax policy division of the Department of Finance. Writing in early August, it said the Local Property Tax exemption currently applied only to charitable bodies which were “qualitatively different to the position of HEIs [higher education institutions] and student accommodation. Having regard to this and the Government’s policy on restricting the number of LPT exemptions, the recommendation cannot be supported.”

On reducing VAT to 0 per cent for student accommodation works, the Department of Finance said this was prohibited under Article 110 of the EU VAT Directive.


“The other possible option would involve a Ministerial Refund Order where the VAT paid on certain activities be refunded in line with terms and conditions laid down by the Minister.

“[The Department of] Finance would not support the introduction of a Ministerial Refund Order as they are against the guiding principles of VAT and Ireland hasn’t introduced any new Refund Orders since the 1970s/1980s. Introducing one now would set a precedent that other lobby groups would be keen to follow up on.”

The HEA had also proposed creating a tax credit system for construction of new student accommodation, similar to those applying in research and development and the film industry, or under the home renovation scheme. It suggested that to qualify for tax relief investors must give the relevant higher education institutions an option of purchasing the properties after an agreed period of time. “This will ensure a high quality sustainable long-term project.”

However, the Department of Finance gave the proposal short shrift, saying: “It is difficult to analyse the document properly and provide detailed observations on such scant material.”

“With regard to the proposal of a targeted tax credit which could be set off against the HEI group’s PAYE/PRSI liabilities. This is very unclear, and likely not possible,” the department wrote, adding the proposals show “a fundamental lack of understanding of the tax system.”

Finance said the HEA document should be amended to read that “consideration” be given to tax measures, a wording adopted in the published version.

Joe Humphreys

Joe Humphreys

Joe Humphreys is an Assistant News Editor at The Irish Times and writer of the Unthinkable philosophy column