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DUBLIN (Reuters) - Ireland’s finance minister on Tuesday announced a series of measures in his budget for 2018 to ease its housing crisis, something it has identified as its top domestic priority.
While Ireland was left with a surplus of houses after a property crash a decade ago that caused prices to plunge by around 50 percent, a recovery in the construction sector has badly lagged a resurgence in the wider economy.
The severe housing shortage combined with surging demand from a growing population and economy has caused house prices and rents to rise sharply in recent years and increased homelessness to record levels.
The following are some measures announced to date:
- The government said it will increase a planned new vacant-site levy of 3 percent due on sites not developed in 2018 to 7 percent the following year - a message to owners that “you need to get on with developing your lands urgently.”
- Stamp duty payable by the fast-growing commercial property sector will be hiked to 6 percent from 2 percent to encourage builders to focus instead on residential property. Commercial land purchased for housing will be entitled to a refund.
- Up to 750 million euros will be moved from the country’s sovereign wealth fund, the Ireland Strategic Investment Fund (ISIF), to a new body that will offer debt finance to viable projects experiencing difficulty obtaining funding. The state’s “bad bank”, NAMA, will assist in its operation.
- The amount of time investors who bought between 2012 and 2014 must retain a property to gain a capital gains tax holiday was cut to four years from seven years to reduce any impact it may have on limiting the supply of development land.
- An extra 500 million euros will be provided to build an additional 3,000 social houses by 2021, boosting to 33,500 the number the government has pledged will be delivered by then through construction.
- Housing Minister Eoghan Murphy has in recent weeks proposed increasing height restrictions for apartment buildings in some locations and removing mandatory car-parking for apartment blocks close to high-quality public transport in a bid to make them more attractive to build.
- He has also suggested looking at encouraging building properties specifically for the rental market and to look at models of shared accommodation used in other cities.
- The government in 2016 announced a tax rebate of up to 20,000 euros to help first-time homebuyers accumulate mortgage deposits. It has resisted pressure to scrap the scheme from critics who say it has further boosted prices.
- Earlier this year the government introduced temporary controls on residential rents to limit annual increases in certain areas to 4 percent.