INCREASING STAMP DUTY in tomorrow’s Budget could exacerbate the housing crisis, according to estate agents Savills.
It has been widely reported that the government will announce a rise in commercial stamp duty, which applies to non-residential property such as land, options over land and commercial premises.
Savills said that most residential land sales, which are a starting point for housing development, are classified as commercial property transactions.
Its director of research John McCartney said: “The housing crisis originates from an absolute shortage of residential property.
One reason for the shortage is that, in certain locations and for certain types of property, it costs more to develop units than they can be sold for. Raising the stamp duty on sites will make this worse by increasing costs at the very time when we should be reducing them.
In other Budget-related news, business group Guaranteed Irish has published steps it says the government needs to take to ensure “sustainable construction in Ireland in future news”.
These measures include a reduction in VAT on houses to 9%, the retention of the controversial help-to-buy scheme and the recommencement of major infrastructural projects that were put on hold during the recession.
Guaranteed Irish CEO Brid O’Connell said that the group’s members do not want a return to the “boom and bust patterns of previous years” and that it hoped by improving affordability in the construction sector, these savings could be passed on to home buyers.
She said: “Affordability is a huge stumbling block in the construction sector, both for builders and manufacturers and for the end customer.
One of the most effective and immediate ways to reduce costs would be a reduction in VAT on house prices to 9%… Any decrease in Exchequer earnings as a result would be offset by increased activity in the housing market. We need bold measures like this to really address the challenges currently facing the construction industry.
Paschal Donohoe will deliver his first Budget as Minister for Finance tomorrow.
TheJournal.ie will be liveblogging the Budget Day events on Tuesday and bringing you all the breaking news about how this year’s Budget is going to impact on your pocket. Join us then.
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