Minister for Finance Michael Noonan in the Dáil, on October 11, delivering his sixth budget speech since 2011
Minister for Finance Michael Noonan has delivered six budget speeches since 2011.
On October 14, 2015, in relation to Budget 2016, he said:
“There will be no return to the past where tax incentives for developers drove supply.”
On October 11, 2016, in relation to Budget 2017, he said:
“There is an acute shortage of new houses being built in Ireland and I am introducing a Help to Buy Scheme to address this problem.”
Further to this…
First-Time Buyer writes:
No one would deny that we have a housing and homelessness problem. However despite house prices increase ranging from 20% to 50%, there has been very little increase in output.
So what is the problem?… Land hoarding.
Brendan McDonagh recently told the Housing and Homlessness Committee that since the start of 2014, NAMA has sold land that could provide up to 20,000 units – but just 5% of that has so far been delivered in new homes.
In addition, local councils have zoned enough land to provide for 16 years’ demand but many of these sites are not being developed because owners are holding onto sites in the expectation that prices will rise, allowing them to maximise profits.
Unfortunately, councils have no legal powers to force owners of zoned lands to build, even if planning permission is in place and demand for homes is high.
The 3% annual level on unused development land that was introduced in the Urban Regeneration and Housing Act does not take effect until three years after the land is identified as being suitable for housing and the earliest owners will have to pay is 2019.
Furthermore, the CGT exemption that was brought in 2012/2013 allows people to buy land, hold it for seven years and not pay any tax on its sale. So, rather than selling the land people are sitting there waiting until 2019 before they’ll release it to the market.
Even at an individual level, the Government has ensured that properties are passed from one wealthy generation to the next rather than be placed on the open market.
The Government increased the inheritance tax threshold by 11% to €310,000 and Noonan has refused to close an openly abused loophole which allows parents gifting homes worth €1m or more to their children and avoid tax.
So, rather than address the supply side issues, the Government has decided to introduce a Help To Buy Scheme. This will do nothing to address the supply side constraints and, according to Davy’s economists, will simply push up house prices next year and the following year.
The best part though is that in 2015 the same Government commissioned an ERSI report entitled “Tax Breaks and the Residential Property Market” in which they concluded that “tax breaks aimed at stimulating house and apartment building should be avoided”.
The Governor of the Central Bank, Philip Lane, is one of the many critics of the new Help To Buy Scheme and has said that it will end up serving as a subsidy for builders…