Builders to ask Government to consider range of tax breaks

IHBA calls for extension of help-to-buy and affordable loan schemes

Incentive programmes designed to stimulate construction may prove controversial given the history of such programmes during the Celtic Tiger. Photograph: Alan Betson / The Irish Times

Incentive programmes designed to stimulate construction may prove controversial given the history of such programmes during the Celtic Tiger. Photograph: Alan Betson / The Irish Times

 

Builders will ask the Government to consider a range of tax breaks and stimulus measures to spark housing development during the year, including an early indication that the State will extend the “help-to-buy” scheme beyond its current expiry date at the end of the year.

The policy recommendations are contained in a draft document, seen by The Irish Times, drawn up by the Irish Home Builders Association (IHBA), which is a division of the Construction Industry Federation.

While the State has struggled to hit its own targets for the construction of new homes in recent years, tax breaks and incentive programmes designed to stimulate construction may prove controversial given the history of such programmes during the Celtic Tiger.

The IHBA document calls for an extension of the Government’s help-to-buy scheme, which gives house buyers tax reliefs of up to €20,000 when buying a new home. Critics have argued that the scheme is inflationary, and the Government has publicly flirted with ditching it, while home builders and the Government say it has driven demand among first-time buyers and allowed them to access the housing market.

According to the paper, “uncertainty surrounding the continuation of the scheme will cause a reduction in new house building activity levels”, which could “lead to speculation in the market and create instability”. It also calls for the introduction of a tax-incentivised savings scheme for the future purchasers of new homes.

The builders are also set to argue for changes to income limits for the affordable loan scheme operated by the Government. This scheme offers reduced interest rates to individuals who satisfy certain income criteria and have been rejected for mortgages by high street lenders.

The IHBA will push for the Government to change the income limits, which are currently set at €50,000 for single income and €75,000 for dual income households, which it says are overly restrictive. The builders’ lobby will also call for a shared equity loan scheme similar to the UK.

Previous shared ownership loan schemes in Ireland have been characterised, however, by higher levels of arrears and repossessions than the general market.

Social housing

The document calls for a major expansion of “direct provision of social housing by State agencies”, which it says “must be supported at a much greater scale than has applied for the past 20 years”. The suggestion is that land be brought forward for this to be built on a “design build basis”.

There are several policy suggestions which revolve around subsidising access to land, or making it easier for builders to access State lands, for example through the offering of small to medium sized plots of residentially zoned land to builders for affordable housing.

Funding for sites without planning permission, through the Government’s new housing finance agency, Home Building Finance Ireland, is also suggested, as are changes to the density rates currently being sought by planners in regional towns.

Builders are also likely to advocate an exemption for new homes from the section 48 development levy, and the extension of a rebate scheme for development contributions.

IHBA is set to argue for changes to how and why sites are put on the vacant land register, the document reveals. The builders’ association believes sites which are not currently “viable”, or don’t have sufficient infrastructure on site, should be excluded from the register. It will also argue that the Central Bank should examine adjustments to how exceptions to its strict mortgage lending rules are run as, currently, lenders are hitting exception limits early in the year, leading to “delays in closure of sales” at the end of the year.

The IHBA document also criticises delays it says members are encountering for connections to Irish Water and the ESB, as well as on the determination of appeals by An Bord Pleanála.