Housing measures

Brendan Burgess

Brendan Burgess

Founder
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58,305
Policy is to increase supply

(I missed a bit so I don't know if he said anything?)

€200m to support SMEs to build houses?

VAT on sale of apartments to 9% from tonight until 2030

Residential Zoned Land Tax
2000 returns filed. 526 requested deferral as land is being developed.

New exemption if they seek to have it rezoned to reflect the actual economic activity taking place.
 
Delboy said:
So a developer who invested 2yrs ago in an apartment development that's going on the market in the coming weeks/months gets a tax break!
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Nope....tax break is linked to a commencement orders issued moving forward (no retrospection)...so the measure is targeted at new supply

And also you do realize who ends up paying the VAT in the end right? Hint - it isn't the developer, it isn't the PRS 'cuckoo fund' provider, it isn't the mom and pop landlord......its the PAYE worker who ends up buying or renting the apartment....it ultimately gets passed through to them.....the tax incidence burden is abundantly clear here in the deeply unbalanced Irish housing market....which is to say that in a deeply constrained housing market the tenant/principal private resident owner ultimately pays the VAT.

Tax Incidence Theory — Overview


Tax incidence theory examines who actually bears the economic burden of a tax, regardless of who the law says must pay it. In other words, it distinguishes between statutory incidence (who remits the tax to the government) and economic incidence (who experiences the real loss in income or welfare because of the tax).

1. Key Concepts​


  • Statutory incidence: The legal assignment of the tax (e.g., payroll tax legally split 50/50 between employer and employee).
  • Economic incidence: The ultimate distribution of the tax burden after markets adjust (e.g., prices, wages, and returns to capital shift).
  • Elasticities: The crucial determinant of who bears the burden. The side of the market (buyers or sellers) that is less elastic—less able to change behavior—bears more of the tax.
 
letitroll said:
Nope....tax break is linked to a commencement orders issued moving forward (no retrospection)...so the measure is targeted at new supply
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James Brown was very clear on Morning Ireland...the VAT break applies to apartments going on sale from today.
Not apartments that start commencement from today but actual completed apartments that were going on sale today regardless
 
Your right I was referencing the corporate tax deduction....its focused on commencements.

My guess on VAT - because its controlled under various EU state exemptions...is that they couldn't get specificity into it....they had to pick a sale date....and well if you game theory the alternative options like picking a date in the future....well you get perverse outcomes.....like empty completed apartment buildings not being sold waiting for the 9%. Given the paltry level of apartment building in the state in the last 24 months there wont be too many developers popping champagne bottles......I know how much people hate to see the people who produce homes in a lack of homes crisis doing well.

My opinion remains the same.....PAYE workers end up paying the taxes we levy on developers....and on the simple idea that if you want less of something you tax it......VAT 9%, 13.5%....wahtever percent....remains a deeply stupid tax policy in a housing crisis.

The correct posture of course is 0% VAT tax on new housing construction.....and a more meaningful property tax on existing housing stock.
 
Now that some of the nominal monetary viability gap has been closed on the apartment PRS math I expect a lot more talk about the credibility gap international investors attribute to the current policy environment in Ireland….which is to say you greenlight an apartment scheme today and well you just might have it all leased up by 2029…..just in time for SF to nuke its equity value by instituting a nationwide rent freeze and some draconian international cuckoo fund tax….this government is a day late and dollar short with these measures….
 
letitroll said:
The correct posture of course is 0% VAT tax on new housing construction.....and a more meaningful property tax on existing housing stock
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Great idea. I wonder what property taxes would have to be increase to in order for this to be tax neutral?
Receipts from the construction sector in 2024 were €347 million but that's all construction (seems very low, am I correct?).
Property tax receipts for 2024 were €532 million. Would a 50% increase in property tax be sufficient?
 
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Purple said:
I wonder what property taxes would have to be increase to in order for this to be tax neutral?
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I don't think tax neutrality would be the objective here. If you want to improve the affordabilty of housing, then the level of property tax you want is not "enough to cover the cost of zero-rating residential construction"; it's "enough to reflect the cost of taxpayer-funded services that enhance property values".

If you also want tax neutrality, then you can can make other tax cuts, over and above zero-rating residential construction. They can be any kind of tax cut; they don't have to be particularly relevant to housing.
 
TomEdison said:
I don't think tax neutrality would be the objective here. If you want to improve the affordabilty of housing, then the level of property tax you want is not "enough to cover the cost of zero-rating residential construction"; it's "enough to reflect the cost of taxpayer-funded services that enhance property values".

If you also want tax neutrality, then you can can make other tax cuts, over and above zero-rating residential construction. They can be any kind of tax cut; they don't have to be particularly relevant to housing.
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I agree with you generally. I think property taxes are much too low. My thinking is that a cost neutral measure aimed at making new housing more affordable may make increases more palatable to those who don't think their unearned wealth should be taxed. The fact that it would also have a deflationary impact on house prices in general, though probably to a minor extent, wold also be a good thing.
 
Purple said:
Great idea.
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Yes - but of course poltically impossible....being seen by the electorate as a tax break for developers paid for by existing homeowners.

I've been travelling the last few weeks so wasn't in Ireland around the budget......any sense from anyone how the VAT cut for apartments was digested by the voters....was it the old bailing out developers diatribe or did the general population ultimately kinda see the logic in it given the housing crisis? I think in some respects the cut from 13% to 9% was too modest and more radicalism was called for.....however.....i think the public's reaction to the measure (it being the first supply side tax break since GFC excluding local council levy expemtions ) will matter alot moving forward.....digested with little fanfare I think James Browne & Co might press on with much more significant supply side incentives in the future.....all the demand side stuff is good (FTB & HTB) but its fundamentally a cutout for supply side measures and the application & friction FTB and HTB have means they aren't quite as effective as going to say 0% VAT on housing construction writ large would be.
 
letitroll said:
they aren't quite as effective as going to say 0% VAT on housing construction writ large would be.
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Don't disagree there. Would say the levy exemptions are high impact but short lived, we tend to look at individual components of the VAT take rather than looking at the taxation as a whole. For example, including not only VAT but stamp duty, income and VAT take on services, etc. If you consider all of these its a fair amount. Don't forget construction is based on sub contracting services so at every level there is a 23% charge on that service that ends up passed on somehow. And then add in levies on undeveloped land, cost of judicial reviews, failed planning applications etc.
 
lff12 said:
Don't disagree there. Would say the levy exemptions are high impact but short lived
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'short lived' being the operative word.....mobile fixed capital investing is constantly seeking stability and predictability.....schemes, tax breaks are good but ever changing and subject to policy whipsaw.....moving to no VAT on new home construction on permanent basis would be much more impactful than a scheme that temporarily takes it down to something lower.

This government completes overestimates temporary measures as a way to drive increased supply versus the power of permanent reform to do so.
 
letitroll said:
This government completes overestimates temporary measures as a way to drive increased supply versus the power of permanent reform to do so.
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Given that this is a political decision ALL measures could be considered as "temporary" as they could be ripped up by a different govt a couple of years out. Its this that drives a lot of the instability - the promise of a "left led" government intent on attacking the private sector with all its might, especially construction and property.
 
lff12 said:
Given that this is a political decision ALL measures could be considered as "temporary" as they could be ripped up by a different govt a couple of years out. Its this that drives a lot of the instability - the promise of a "left led" government intent on attacking the private sector with all its might, especially construction and property.
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True - but alot of what this Government has done is temporary by design...which makes it uber temporary in a politcal science sense......apartment construction VAT cuts expire 2030......development levy exempstions expiring Dec 2026........as had been said many times its indicative of a Government that cant get out of the way of the private sector....follow the principle that you shouldn’t tax what you want more of...take a leaf out of the UK's book and drop VAT to 0% on new home construction. End of story, no end dates a principal of tax & housing planning. Temporary measures are special hostage to fortune and speak to an ever changing landscape of poltical interference in the market in which they are directed. The exact opposite of what international capital is looking for which is stable never or only ever slightly changing policy around the rental/construction market.
 
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Short version - supply works.....and it works up and down the housing spectrum.....new €450,000 'luxury' apartments....drive down the rents in box bedrooms in shared houses.....you might not think so, but they do.....supply-demand baby!....its undefeated.
 
letitroll said:
as had been said many times its indicative of a Government that cant get out of the way of the private sector
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The cancerous parasite that is the legal industry also need to be removed from the equation. No amount of money and political measures counter the delay and damage that is currently being caused by greedy lawyers.
 
Purple said:
The cancerous parasite that is the legal industry also need to be removed from the equation.
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Sure - but you know dont hate the player, hate the game.....and the Government sets the game....lawyers are going to do what lawyers do...and if your legislative framework creates a cottage industry of objectors who get fabulously wealthy slowing down housing and infrastructure projects....well I know who to blame.....and the fault lies predominately with the Government of the day for not fixing unintended consequences of legislation.
 
Oh sure I've no doubt of their undue influence....but again what industry is not trying to expand their lobbying influence on Government policy....that the legal industry plays the game better than most should not be a surprise....these are high IQ, high focus and high energy people....they will steamroll the average Joe.....but lets be frank, who doesnt know that and so the Government of the day needs to be cognizant of this....I mean look at what the legal profession did to public liability claims in Ireland over a decade.....they created a bubble in them that effectively made it so that SME's in the country could barely get coverage as every player who could exited the market.
 
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