Builders Call For Tax Cuts To Stimulate House Construction

According to The Independent.ie the property industry has called for a cut in VAT rate on construction of homes to be dropped from 13.5pc to 9pc

 

House builders have called for tax cuts to stimulate construction of family homes.And they said the Government could raise €250m to build social housing by selling off excess state properties.The property industry has called for a cut in the valued added tax (VAT) rate on the construction of homes to be dropped from 13.5pc to 9pc for a limited period.Property Industry Ireland, which is part of employers’ body IBEC and whose membership includes builders, surveyors and engineers, said in a pre-budget submission that 5,500 new social homes could be built if the Government sold off surplus state properties.

Such a sell-off has the potential to raise €250m over a five-year period, director of PII Peter Stafford said.

The property industry also wants the rules that require builders to provide some social housing as part of each development to be relaxed.

“We will build fewer than 10,000 private houses in 2014, less than half the required amount. A lack of supply in the private sector further increases prices and rents, but also puts more people in danger of homelessness,” Dr Stafford said.

Tanaiste Joan Burton said recently the Government wants to see a tripling of the number of houses built to 25,000 a year by 2020.

 

Source: The Independent.ie

Consumers ‘May Lose Out’ If Homes Are Under-Insured

According to The Independent.ie householders have been warned that they could lose out heavily if they under-insure their home and its contents and then have to make a claim.

The National Consumer Agency said that most insurers apply a rule that means they will only pay out for the amount listed in the insurance policy.This means that if a home-owner only insures the contents for €40,000, that is all they will get if the contents are damaged, stolen or destroyed.

A survey of eight insurers found this was because most of them were applying the so-called “average clause”.

This is a condition set by an insurer that a payment for damage or loss will be in proportion to the value insured. So, if a building worth €100,000 but insured for €50,000 is totally destroyed, the insurers will only pay €25,000.

Director at the agency Fergal O’Leary said people rarely think about making a claim when buying insurance. But it was important to consider more than just the price of a policy.

He said: “We would strongly advise consumers to take the time to ensure that the amounts provided for rebuild and contents are enough to cover any losses.

 

“Consumers should make a note of any valuable items and check at the quotation stage, so that they will be adequately covered.” New research by the NCA found:

* Consumers can save up to €420 on the price of insurance on annual premiums by making sure to get a number of quotations before buying cover;

* The standard excess varies from €250 to €500. The excess is the first part of any insurance claim that the consumer would have to pay out of their own pocket in the event of a claim;

* All eight providers surveyed have higher excesses for water damage and subsidence claims. In all instances, the excess for water damage was at least twice that of the standard excess, ranging from €500 to €1,000;

* Generally insurers operate on a “new for old” basis by offering a payout amount to replace something that has been damaged or stolen with a new equivalent. But there are exceptions for floor coverings, clothing, and fabrics where a deduction for wear or depreciation may be applied, the NCA warned.

Mr O’Leary said too few people were switching to different providers to get better value.

He said the huge variations in premium costs meant that “many consumers may be needlessly paying more for their cover” than they need to be.

“While our market research shows that consumers who do switch find the process easy, many may find it daunting or believe the hassle outweighs the benefits,” he said.

“Consumers can get a number of quotes quickly, either online, by phone or through a broker and our research shows that if they do, they can make significant savings.”

Source: The Irish Independent

Want A Cut In Income Tax? It Could Mean Tripling The Property Tax

According to the Journal.ie a report by officials in the Department of Finance has suggested that jacking up the local property tax (LPT) could pave the way for a big cut in income tax.

The report suggests that by targeting revenues from the LPT, a major income tax cut could be delivered, improving Ireland’s competitiveness by bringing down wage costs for employers.

A €1 billion target for the LPT would represent more than a tripling of the tax, which has raised around €310 million for 2013 and 2014 to date.

The Department points to research by the OECD which shows that taxes on fixed property assets have the “least distortive” effect on the economy.

Such a policy would be contrary to the Government’s position on raising the LPT, which the authors acknowledge, saying that they are “fully cognisant of the commitment…that there will be no increase in the LPT until 2016 at the earliest”.

They also accept that “a €1 billion increase in property taxation would represent a substantial policy shock”, and say that the target can be scaled down.

The paper argues that the economic benefits of such a move, however, are clear. The results show that real GDP would be 0.3% higher under the new regime, with employment also climbing by 0.4% and unemployment dropping by 0.5%.

SME lending reform

The report also calls for a reduction in the cost of credit to Small and Medium Enterprises, which it says is significantly higher for small businesses than for larger corporates.

Suggested ways of bringing down the cost of capital for SMEs include financial market innovations to encourage the growth of non-bank lenders, or facilitating new banks in entering the Irish market.

If the cost of capital were to come down by 1%, the report finds that small businesses could deliver a 0.5% boost to GDP by 2020, with employment increases of one third of a percentage point.

 

Source: The Journal.ie

Largest Local Authority In Country Considering 15pc Property Tax Cut

According to The Independent.ie, Dublin City Council expects to collect €80m a year in the tax, which means that a drop of 15pc would result in €12m having to be found in existing budgets to provide essential services.

It came after Dun Laoghaire/ Rathdown County Council last night voted in favour of the tax cut.

A consultation period will now follow the vote before a final decision is taken in September. Local authorities are able to vary the rate applied by either reducing or increasing it by 15pc.

Dublin City Council is obliged to ask the public for their views before any hike or reduction is passed.

The local authority said last night that all submissions should inform a report from chief executive Owen Keegan, which would be presented to councillors on September 22 before a decision is made.

“Should the members decide to vary the rate, Dublin City Council must inform the Department of the Environment, Community and Local Government and the Office of The Revenue Commissioners by September 30,” it said.

“Any variation which may be made would apply from January 1, 2015.”

Councils can vary the property tax from 2015. The money is used to provide parks, libraries, fire and emergency services, roads maintenance and other essential services.

Services

Fingal County Council has already committed to a cut of 15pc, which will save householders an average of €60 to €100 next year.

Fingal representatives are following Cork county councillors, who signalled their intention last month to cut the tax by 15pc.

Fingal council has the discretion to consider a cut but fears were expressed that it could have a knock-on effect on services due to a likely €5.2m shortfall in the council’s coffers.

Some 80pc of the property tax take is held by the council in which it is collected. The remaining 20pc is retained by the Department of the Environment and redistributed to other local authorities.

Submissions can be made through www.dublincity.ie or by returning a form to the council offices.

Meanwhile, a number of local authorities have sought clarity from the Government over whether their property tax surplus will be cancelled out by cuts to other areas.

Source: The Irish Independent

Property Prices Tipped To Rise Up To 20pc This Year

According to The Independent.ie property prices are tipped to rise up to 20pc this year.

Increases so far this year mean values are on course to jump by up to 20pc in the capital, a leading economist said.And across the country as a whole, property price rises of 10pc for the year have been forecast by Alan McQuaid of Merrion Stockbrokers.

He said the official figures from the Central Statistics Office (CSO) showed there was now strong evidence of a recovery in the housing market.

“Based on the figures for the first five months of 2014, we now see an average rise in Irish house prices of around 10pc for the year as a whole, with Dublin posting the biggest increase, of 15pc to 20pc.

“This compares with an average increase in house prices of 1.8pc in 2013, the first positive change since 2007,” he said in Merrion’s quarterly ‘Economic Outlook’.

A chronic lack of family-type homes for sale in urban areas, and Dublin in particular, is driving prices up.

“There is an element of housing froth at the moment which is pricing first-time buyers out of the market,” Mr McQuaid said.

Credit availability was also an issue, but this was more down to weak demand than banks’ lack of mortgage financing.

“If that is indeed the case, then an improving labour market should see the demand for credit pick up in the coming months, but that is only going to push prices up further if the supply of houses for sale doesn’t increase dramatically,” the report says.

The prediction of a continued surge in prices comes as figures from the European statistics agency, Eurostat, found that property price rises in Ireland last year were among the highest in the EU.

Prices here rose by 7.8pc in the first three months of this year when compared with the same quarter last year, Eurostat said. Only in Estonia, Latvia and the UK were there higher increases.

A large number of EU countries saw a modest decline in prices, including Cyprus.

The sharp rises are making it more difficult for new buyers to secure a home.

The latest CSO figures show prices nationwide rose by 10.6pc in May, when compared with a year previously. Prices jumped by 22pc in Dublin compared with a year ago.

The surge in values means a house valued at €300,000 in Dublin last year is now worth €366,000.

Calculations by Goodbody Stockbrokers based on the CSO figures indicate that the average property is now valued at €183,000 nationally. This is a rise of almost €18,000 in a year.

In Dublin, the average price is now €242,600, up almost €44,000 in a year.

Outside the capital, prices now average €150,000, up €2,600 since May 2013.

Source: Irish Independent

 

Councils Fear Cuts In Other Areas Will Hit Property Tax Surplus

According to The Independent.ie  a number of local authorities have sought clarity from the Government over whether their property tax surplus will be cancelled out by cuts to other areas.
Council officials have warned local representatives that they now cannot guarantee whether proceeds generated by the property tax will be retained to improve local services.
While there was an expectation among councillors in over a dozen local authorities that they will have the power to reduce the tax rate by 15pc, council officials have refused to confirm that this is the case.
The issue is particularly relevant in Dublin, where property tax prices are higher than the rest of the country.

Government sources have now confirmed that a number of local authorities have contacted the Department of the Environment seeking clarity on the issue. Council officials have requested to know whether 80pc of the proceeds from the tax will be retained locally before any instruction is issued to councillors.

In correspondence from head of finance at Dublin City Council, Cathy Quinn, it is confirmed that the council does not yet know whether the money will be diverted to local services.

The correspondence, seen by the Irish Independent, states that clarity surrounding €80m of funding is being sought.

“Should the minister confirm the 80:20 apportionment of Local Property Tax receipts of 80pc held locally and 20pc held centrally for redistribution, then €64m would be retained by DCC with €16m being held centrally,” Ms Quinn said.

“Dublin City Council is awaiting clarity on whether other government grants (which broadly total in 2014 to €80m) would be affected by arrangements around the LPT.”

The confusion over the property tax comes after the Irish Independent revealed that Fine Gael-led plans to “claw back” the property tax surplus from a number of councils have caused deep tensions in the Coalition.

Source: The Irish Independent

First Ever Online Property Auction

TheJournal.ie are reporting that bidding for the world’s first ever online-only property auction opens today.

It starts at 10am this morning and will close 24 hours later.

The online-only auction features 22 properties around Ireland.

Allsop space, the auctioneers holding the auction, says that interest is building from potential buyers based on online registrations.

Speaking to TheJournal.ie, Director of Auctions at Allsop Space, Robert Hoban, said:

Four-hundred and fifty people have signed up, and of that about 50 have officially registered.

Asked if he thinks that online auctions will put more pressure on an already heated property market by encouraging outside cash buyers, Hoban said:

It may be easier for people overseas to bid, but they’ll find it very hard to be successful. Irish buyers have become increasingly competitive, and a lot of overseas bidding is outbid.

Two years ago, 20% of Irish property was bought from overseas but now that figure is just 6%.

A registered user must submit a pre-authorised payment of €5,000 by credit card – known as the “Bidder Security.”

This is frozen on the potential buyer’s card and will only be taken if they’re a winning bidder.

The bidding will close in 15 minute intervals tomorrow, during which period all bids will be openly logged and displayed.

Once the timer reaches zero for each lot, the highest bidder wins, subject to the reserve price having been exceeded.

(Any bid within one minute of closing automatically adds two minutes to the timer, allowing further counter bidding.)

A PDF Contract for Sale is e-mailed to the buyer, seller and their solicitors upon sale and is digitally signed on behalf of the vendor and the purchaser.

The digital signatures allow the transactions to be legally binding.

The balance of 10% deposit (less €5,000) is then due within 48 hours.

Hoban added, “We hope that the convenience will further the reach to our potential audience, with our catalogue at their fingertips from anywhere in Ireland or the world.”

Source: TheJournal.ie

Latest Daft Report Highlights Housing Shortage In Dublin

According to the latest survey carried out by Daft, it is now agreed by almost all commentators that what characterises the housing market in Ireland’s urban areas – in particular Dublin – is a supply shortage, rather than a bubble. That is not to say a bubble, whose two characteristics are unrealistic expectations and loose credit, should not worry policy-makers. The easiest way to walk into another bubble is to ignore a price spike caused by supply shortages, creating momentum in house prices that feeds into both expectations and credit. This is the lesson Ireland learned the hard way after the supply shortages of the period 1995-2001.

But the crucial difference between price rises caused by supply shortages and those caused by a credit bubble is in the solution. As the UK is discovering at the moment, it is very tricky to stop a bubble in mid-stream. As the metaphor suggests, pricking a bubble always causes it to pop.

With supply shortages, though, the answer is quite straightforward – more homes need to come on to the market. There are two ways this can happen. The first is greater churn of existing properties. With prices in Dublin up – in South County Dublin by almost 40% in two years according to the figures in this Daft Report – we are starting to see significantly more properties listed for sale.

More than 6,000 Dublin homes were put up on the market in the first half of 2014, the largest number since the same period in 2008. The picture is similar in most parts of the country, with the dramatic increase in properties coming on to the market helping to stop the downward trend in the total number of properties sitting on the market.

But greater churn will only get us so far. Building is the rest of the solution. There are simply not enough dwellings relative to families in Ireland’s urban areas. To those living in many rural areas, blighted by half-built ghost estates, this may seem an odd solution. However, what first-time buyers prize now is access to amenities, in particular the amenity of job creation, which goes hand in hand with population density. The discount for distance from urban life has grown significantly in Ireland since 2006.

So far, so simple – build more family homes. And yet there is a further twist. Earlier this year, Ireland’s Housing Agency commissioned research to investigate how best to deal with Ireland’s demographic trends, in particular rising numbers of families living in or near cities and large towns. Their headline finding probably came as something of a surprise to most – there are enough family homes in Ireland.

The problem, of course, is that families are not the ones living in a large chunk of family homes. Instead, many of Ireland’s most desirable family homes are lived in by empty nesters. What the Irish market lacks compared to its counterparts in other developed countries is both carrot and stick. The stick, for want of a better word, is property tax. In most developed countries, annual property tax bills for living in a family home are large enough that when the family home becomes an empty nest, the couple decide to downsize and save.

It may be an unpopular thing to say but – if we want housing in Ireland to be affordable – the Local Property Tax is far too low, rather than far too high. This, of course, is very easy for a commentator to say, but next to impossible for a government to bring in, unless of course it offered a revenue-neutral switch away from VAT and income tax, towards property tax.

Assuming that this will not happen in the next five years, what can be done? Well, if the stick does not exist, a bigger carrot is needed. Currently, an empty nester in Dublin looks around and sees very little that they could see themselves moving into in their early sixties. Talk of assisted living communities is certainly worthwhile – but is really a step further on, for people in their 80s, not their 60s, which is when the market needs movement.

So what needs to be done? While the economics revolves around reducing the cost of building, the psychology is simpler. What kind of higher-density home would someone in their 60s want to move into? I would suggest that there are two aspects to this. The first is location: someone who has lived in Rathfarnham or Clontarf for more than twenty years, for example, has built their network of family and friends in that area. Dublin needs to “densify” its suburbs, building apartment blocks close to family, friends and amenities.

But not just any old apartment blocks – if the first criterion is location, the second is quality. We can’t expect empty-nesters to give up their family home and move into the sort of apartment most people think of when they hear the word: built in the 1990s, pokey and paper-thin walls. I am realistic enough to believe that no Irish politician will bring in the higher property tax that works in other countries. So to prevent supply shortages from turning into another property bubbles, we need the carrot of top-end apartments – call them condos, duplexes, luxury, deluxe or what you will – that empty-nesters will be proud to call home.

Source: Daft.com.