The Government should not be afraid to allow builders make greater profits, and developers must given incentives to boost construction of homes, Minister of State Finian McGrath has said.
The Minister of State for Disability Issues, who has a place at the Cabinet table, said the Government must embark on a six-month plan rapidly to increase the supply of affordable homes.
The Government must get over a fear of being labelled as being "on the side of developers", the left-leaning Independent Dublin Bay North TD told The Irish Times.
The lack of €200,000-€450,000 homes is the key issue affecting many of his constituents, he said: “There is an element still in government that needs to wake up, that we need to focus on affordable housing.
“What I am saying is: Government policy should be, for six months, to focus on those people to get more affordable houses so people can buy a quality, decent house.
“We have to look at everything. It might be reducing VAT rates, be prepared to give the construction industry a break every now and again,” the Minister of State said.
The Government has faced calls from Fianna Fáil, the Construction Industry Federation and others to cut VAT on construction from 13.5 per cent to 9 per cent, though Minister for Finance Paschal Donohoe refused.
However, in an interview with The Irish Times Mr McGrath said such a cut may need to be examined again since many middle-income earners "cannot buy their own homes".
“I think people are afraid if they give the construction sector a break they will be blamed as being on the side of the developers. I think they have to get out of that mental block because we have to get guys building on sites.
“The construction workers are telling me every single day that the margin for a builder building a house is too small,” he said, adding that building hotels or primary care centres is currently more profitable for builders.
When asked specifically if the Government should not be afraid to allow developers make a profit, Mr McGrath said: “Yes, we have to incentivise and that will help with the affordable housing issue.
“Everyone is talking about social houses, everyone is talking about homelessness but if you want to deal with those two parts, be focused on affordable housing.
“Then you’ll free up more space for the social housing list. There are too many people at the moment who, I feel, are on the social housing list that shouldn’t be there in the first place.”
Minister for Housing Eoghan Murphy appreciates what needs to be done, but is in a “very, very difficult position”, he said, while Fianna Fáil leader Micheál Martin “has a point” when he talks of the need to focus on cheaper homes.