Leading Irish property developer Michael O'Flynn has welcomed the Government's budget measures to stimulate the housing market but expressed disappointment that an industry proposal to reduce the VAT rate on construction to 9 per cent was not implemented.
Speaking to The Irish Times, Mr O'Flynn also said the Government's help-to-buy scheme, which will offer tax rebates of up to €20,000 to first-time buyers, would probably result in the Central Bank leaving its macroprudential rules on mortgage lending unchanged.
The Cork man believes these rules are too restrictive and make it difficult for many first-time buyers to save a deposit for a home.
“I would welcome anything that makes housing more affordable for buyers,” he said. “But this is not for builders. I’m disappointed that they didn’t look to reduce VAT and the various levies. They need to make housing more affordable and we’re not dealing with the crisis in front of us. I don’t see enough [the budget] that will address supply.
Mr O’Flynn was disappointed that the Government ignored an industry proposal to reduce the 13.5 per cent VAT rate on construction, which he argues would cut input costs.
“I couldn’t believe they left the 9 per cent rate for tourism in place when you can’t get a hotel bed in Dublin. Good luck to that industry but we need the same treatment.”
Viable for developers
Mr O’Flynn said house prices need to rise to make construction of new homes viable for developers. “This industry is on its knees and we have to deal with the cost side of things. Let’s get mature about this thing because we’re not dealing with the issue.”
He also noted how the help-to buy scheme applies to first-time buyers only, purchasing new homes.
“What about trader-uppers?” he said. “They’re not doing anything for those people.”
Mr O'Flynn expects to build more than 200 new homes in Ireland this year, across a number of schemes.
He argues that the Central Bank’s rules on mortgage lending are too restrictive and need to be relaxed. The regulator is due to announce the outcome of a review of the rules in November but has indicated that only a minor tweaking is likely.
