The Government should introduce an emergency Vat cut for apartment builders as a way to solve the housing crisis in Dublin, according to Construction Industry Federation (CIF) ceo Tom Parlon.
Introducing a Vat cut for new apartment blocks for a time-limited basis of two to three years would immediately knock as much as €20,000 off the price for first-time buyers, claimed Parlon.
“We have an emergency situation in housing. It’s a social and economic crisis that the Government is going to have to face up to. We previously had an emergency budget. There are ways and means of doing everything.”
Parlon said that having to pay 13.5pc Vat “in one big lump on a 200-unit apartment block is madness”.
He added: “That apartment block is going to generate €100,000 of income for the Revenue through levies and taxes anyhow.”
Parlon said his organisation met with the IDA last week to discuss the lack of supply of one- and two-bed apartments for young, single workers who want to live close to their employment in the growing number of tech firms in Dublin’s city centre.
“The cost of accommodation is going to be a challenge into the future.
“If you look currently at the amount of office development that is under construction there is in excess of 40,000 work spaces being created over the next six months, so we are going to need dozens of blocks of at least 100 apartments apiece in the inner city that are not currently being built,” he said.
Parlon insisted that the construction sector has the capacity to build enough houses.
“I believe that we have. In sectors where the money is available – whether it be hotels, student accommodation or commercial blocks of offices – the industry is turning out stuff at a very high rate.
“But it is just not happening on the housing side. If you do the sums on the residential it just doesn’t work,” he said.
“Building houses and apartments is not rocket science. We have the capacity to do it and if the money and the planning is right then the industry will be able to build them very quickly.”
But he said in the current environment only high-end apartments that cost between €500,000 and €1m are viable to build at the moment, the construction chief claimed. “Builders cannot afford to build an apartment that they can sell for €250,000,” he said.
A Government working group is due to report soon on changes that could be brought to planning guidelines brought in during 2015.
Among the changes that the construction industry is calling for to make it more economic to build apartments is car parking provision.
“Currently, apartment builders need to provide space for car parking in the city centre, adding up to €50,000 per unit to the cost. And this is often for people who don’t have or want cars,” he said.
The industry is also pushing for changes to the height cap in the city, as well as rules on dual-aspect apartments and the number of apartments allowed on each floor per lift shaft. “If the Government is forward thinking, they will know that the right design is what is important when you are building apartments.”
He said such changes, alongside a 4pc Vat reduction for two years on apartments could have a huge impact.
But Parlon said hold-ups in planning and local authority offices are also having a big impact on the supply of housing and the provision of necessary infrastructure to open up building land.
“There is an ingrained inertia in officialdom, be it in local authorities or planning authorities,” he said.
“It’s not that they can’t do it when they want to. In Donegal when they had the big weather alert, and roads and bridges were washed away, they were able to get around planning issues and roads and bridges were built quickly.
“But it doesn’t seem to extend to getting some common sense on other stuff.”
Sunday Indo Business