To ask the Minister for Finance the first and full year cost of reducing VAT on residential construction from 13.5% to 9%.
The VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. Under the VAT Consolidation Act 2010, the construction and supply of new residential housing, including renovation and repairs, is charged to VAT at 13.5%.
I am advised by the Revenue Commissioners that it is tentatively estimated that introducing a 9% VAT rate specific to residential construction could cost in the region of €220m in the first year and €270m in a full year. This estimate is based on 2018 construction estimates using Revenue and third party data sources, including industry reports and property price register data. The estimate assumes no behaviour impact on consumer demand from a change to the VAT rate.
Applying a lower VAT rate to the construction of new residential properties would result in different VAT rates between residential and non-residential construction services, as non-residential construction services cannot go below 12% under the EU Directives. This would be very difficult to administer and could lead to accidental or fraudulent underpayments of VAT.
* To ask the Minister for Finance the first and full year cost of the full reintroduction of a rental tax credit based on the system in place on 7 December 2010.
* To ask the Minister for Finance the estimated cost of introducing a new affordable housing tax credit whereby landlords would not have to pay tax on rental income for properties let over a five year period at affordable levels.
Regarding the cost of the full reintroduction of a rental tax credit, I am advised by Revenue that the number who availed of the rent relief tax credit and the associated cost to the Exchequer are available on the Revenue website at the following link:
The credit was available to those paying for private rented accommodation. This included rent paid for flats, apartments or houses. It did not include rent paid to local authorities. The credit was only available to persons renting on 7 December 2010. This tax credit ceased to be available after 31 December 2017.
I am further advised by Revenue that, as the rent relief tax credit is in the process of being phased out (only back claims can now be processed), and no new claimants have qualified for the relief since 2010, tax returns do not provide a reliable basis for Revenue to accurately predict either the numbers of tenants that could be eligible to claim a rent credit were it to be re-introduced post 2017 for all tenants, or the degree to which potential claimants could absorb the full amount of the credit.
Therefore, there is no reliable basis available to Revenue on which to estimate the potential cost of a rental tax credit reintroduction.
It may be of assistance to the Deputy to note that, according to Census 2016 data, the private rented sector amounts to approximately 310,000 units (for comparison, in 2010 the rent relief tax credit cost €82.8 million in respect of 189,000 claimants). However, all of the individuals recorded on the Census as renting these 310,000 units may not qualify for rent relief tax credit or be able to absorb the relief in full if it were available.
Regarding the Deputy's question on the estimated cost of introducing a new affordable housing tax credit, whereby landlords would not have to pay tax on rental income for properties let over a five year period at affordable levels, Revenue have informed me there is not sufficient information available to provide an estimate.
In order to cost such a measure, the number of potential landlords eligible would have to be identified and a definition of ‘affordable levels of rent’ provided.
To ask the Minister for Finance the first and full year cost of increasing mortgage interest relief at 5% intervals up to 100% for rental income.
As the Deputy will be aware, Finance Act 2016 provided for the phased restoration of full interest deductibility in respect of interest on loans used in the purchase, improvement or repair of rented residential property. This is being done over a 5 year period by way of annual increments of 5%, with the first increase from 75% to 80% having taken effect for interest accruing on or after 1 January 2017, and the second increase from 80% to 85% having taken effect for interest accruing on or after 1 January 2018.
Further annual 5% increments in the rate of deductible interest will apply to interest accruing in each of the years 2019 to 2021 inclusive, and full deductibility will be restored for interest accruing on or after 1 January 2021.
I am advised by Revenue that, based on personal Income Tax returns filed for the year 2015, the latest year for which complete information is available, and making certain assumptions (such as no behavioural change), it is estimated that the cost of increasing the level at which landlords can claim interest repayments against tax for residential rental properties from 80% (the amount allowable in 2017) at 5% intervals is as set out in the table below.
Mortgage Interest Relief Full Year Cost First Year Cost
80-90% €22m €12m
80-95% €33m €19m
80-100% €44m €25m
However, as noted above, the legislation already provides for phased restoration over a 5 year period, with full deductibility restored from 2021, and as such the figures above refer primarily to a cash-flow cost from accelerated implementation.
To ask the Minister for Finance the first and full year cost of allowing the local property tax as a deductible expense against rental income.
I am advised by Revenue that the estimated cost of allowing Local Property Tax (LPT) as an allowable expense against rental income for tax purposes is in the region of €12 million in the first year and €20 million in a full year. This estimate is calculated on the basis of Local Property Tax returns that indicated the property was a non-principal private residence, and assumes that each taxpayer would have sufficient rental income against which to offset the amount of LPT paid.
It should be noted that Revenue are unable to separate out rental properties, so properties indicated as non-principal private residences will include holiday homes and certain types of vacant properties which are not let out.
Equally, there will also be properties rented out but not indicated as non-principal private residences, which could balance out the effect of some of the holiday homes.
To ask the Minister for Housing; Planning and Local Government the estimated first and full year cost of increasing the housing adaptation grant funding to 2011 levels.
I recently announced total funding of €66.25m for the Housing Adaptation Grants schemes for Older People and People with a Disability in 2018. This is made up of €53m exchequer funding, which is an increase of some 11% on the 2017 figure, with the balance of €13.25m coming from local authority resources. Increasing funding for next year to 2011 levels would cost an additional €13.21m, made up of €10.63m from the Exchequer, with a further €2.58m to be contributed by the local authorities.
I am conscious of the social benefit accruing from the schemes, particularly in terms of facilitating the continued independent living by older people and people with a disability in their own homes. This is recognised in the Programme for Government and as a consequence, funding has been increasing year on year since 2014. Further consideration will be given to increasing funding over the coming years in the context of the range of housing supports and provision being made under the Rebuilding Ireland Action Plan for Housing and Homelessness.
To ask the Minister for Housing; Planning and Local Government the estimated first and full year cost of increasing housing assistance payment limits at 5% intervals.
The Housing Assistance Payment (HAP) rent limits were increased significantly in July 2016, including by up to 60% in some areas. The Government also provided flexibility to each local authority to agree to a HAP payment up to 20% above the maximum rent limit, where it is necessary, because of local rental market conditions.
At the end of Q4 2017, 22.4% of the total number of households being supported by HAP were benefiting from the additional flexibility. When the additional discretion available to homeless households in the Dublin Region is removed, 16.7% of households nationally were benefiting from the additional flexibility. In those cases, the average rate of discretionary payment being used was 15.2% above the relevant rent limits. Data for Q1 2018 will be available shortly.
The previous revision to the maximum rent limits was proposed jointly by the Department of Employment Affairs and Social Protection and my Department following a comprehensive rent review process. The review considered a number of data sources, namely the Residential Tenancies Board (RTB) database, Daft.ie Rental Market Reports and the CSO Rental Indices. Consultation and engagement with those administering both schemes was also carried out. In relation to the Deputy's query, detailed analysis would be required to provide the figures requested in order to ensure any increases reflect the market trends experienced under both the rent supplement scheme and the HAP scheme.
My Department monitors HAP data on an ongoing basis, as well as other key information relating to the private rental market. Indications are that the current HAP rent limits, and the flexibility to exceed those rent limits, provide local authorities with sufficient capacity to assist households in securing rented accommodation that meets their needs.
I have no plans at present to increase HAP rent limits, a course of action which could have further inflationary effects on the private rented sector and thereby have a potentially detrimental impact on the wider rental market, including for those households who are not receiving HAP support.
To ask the Minister for Housing; Planning and Local Government the estimated first and full year cost of increasing the housing capital budget to 2008 levels.
The 2018 capital provision for housing is €1.141 billion. The cost of increasing the capital provision to the 2008 expenditure level is €375 million.
The total housing budget for 2018 is €1.9 billion compared with expenditure of €1.7 billion in 2008.
To ask the Minister for Housing; Planning and Local Government the anticipated launch date of the national regeneration and development agency; and if he will make a statement on the matter.
Project Ireland 2040, published in February 2018, signals a significant policy shift towards securing more compact and sustainable urban and rural development, which requires significantly more effective land management in key development areas. Against that background, it is proposed to establish a National Regeneration and Development Agency to assist in ensuring a more effective approach to strategic land management, particularly in terms of publicly owned land.
The Agency will act as a national centre of expertise, working with and supporting local authorities, public bodies and other interests, to harness public lands as catalysts to stimulate regeneration and wider investment and to achieve compact, sustainable growth, with a particular emphasis on complex regeneration projects and the provision of affordable housing.
Detailed arrangements in relation to the functions, powers and mechanisms and legislative arrangements for the establishment of the Agency are currently being developed by my Department, in conjunction with the Department of An Taoiseach and the Department of Public Expenditure and Reform, with a view to their early finalisation. The current work in this area will inform the functions, resource needs, budgetary requirements and location of the Agency.
Repair and Lease Scheme
To ask the Minister for Housing; Planning and Local Government the anticipated number of repair and lease scheme units due to be operational in 2018; and if he will make a statement on the matter.
The Repair and Leasing Scheme (RLS) and the Buy and Renew Scheme have been developed to assist local authorities or Approved Housing Bodies (AHBs) to harness the accommodation potential that exists in certain vacant dwellings across Ireland.
The RLS is targeted at owners of vacant dwellings, who cannot afford or access the funding needed to bring their dwellings up to the required standard for rental property. Subject to the suitability of the dwelling for social housing, and the agreement of the property owner, the cost of the necessary repairs will be met upfront by the local authority or an AHB.
At the end of 2017, a total of 820 applications had been received under the scheme. Local authorities were engaging with the property owners in relation to 573 properties, 31 agreements for lease had been signed and 9 homes had been delivered and tenanted. A detailed breakdown of the RLS scheme data up to end Q4 2017 is available on my Department’s website at the following link:
It is clear from the end 2017 output that RLS has not yet delivered the level of new social housing homes envisaged. I have reviewed the operation of the scheme, as part of the review of Rebuilding Ireland, and I have concluded that the scheme has significant potential but there are areas where it can be improved to make it more attractive and effective. At the second Housing Summit held on 22 January 2018, I announced a number of key changes to the scheme which took effect from 1 February 2018. These include:
a reduction in the minimum lease term required from 10 to 5 years;
an increase in the proportion of market rent available to property owners where they take on more responsibilities under the tenancy, meaning that up to 92% of market rent will be available; and
provision of additional funding for property owners, over and above the current €40,000 limit, where the dwelling is a bedsit type dwelling being brought into compliance with the Standards for Rented Houses Regulations and made available for social housing.
I am making €32 million available for the scheme in 2018 and I expect local authorities and AHBs to continue to implement the scheme locally.
Over the period 2016 to 2021, the national target is for the delivery of an additional 50,000 social housing homes through Build, Acquisition and Leasing Schemes. The ambition is for 33,500 of these homes to be delivered through new build programmes including Part V; for 6,500 to be delivered through Acquisition programmes including the Housing Agency Acquisition Programme; and for the remaining 10,000 homes to be delivered under a range of leasing initiatives including the RLS. Out of the total 10,000 homes to be delivered under Leasing, it is expected that 2,000 will be leased by local authorities in 2018 under a range of leasing initiatives, including the Repair and Leasing Scheme, long term leasing and the new Enhanced Lease.
I wrote to all Local Authorities on 18 April 2018 setting out their social housing delivery targets for build, acquisition and leasing for 2018, and for the period 2018-2021. The targets are published at the following link:
The RLS data for end Q1 2018 are currently being collated and will be published shortly.
In the case of the Buy and Renew Scheme, funding is made available by my Department to facilitate local authorities in acquiring and remediating vacant properties that may be suitable for social housing.
As with standard acquisitions, local authorities have delegated responsibility to utilise the Buy and Renew Scheme, as part of the blend of property acquisitions, as appropriate to their area, given housing need and the availability of properties of different types. To date, my Department has supported the purchase and remediation of over 90 such homes under the scheme, details of which are set out in the table below.
Local Authority Number of homes
Clare County Council 1
Dun Laoghaire/Rathdown County Council 12
Fingal County Council 11
Kerry County Council 14
Kildare County Council 2
Limerick City & County Council 16
Meath County Council 14
Monaghan County Council 16
Offaly County Council 1
Tipperary County Council 1
Waterford City & County Council 6
Rebuilding Ireland Home Loans
To ask the Minister for Housing; Planning and Local Government the number of Rebuilding Ireland home loans processed by the Housing Agency to date; the number granted and refused, respectively; and if he will make a statement on the matter.
As with the previous local authority home loan offerings, loan applications under the Rebuilding Ireland Home Loan are made directly to the local authority in whose area the property proposed for purchase is situated. My Department does not directly collect information on the number of enquiries to local authorities regarding the loan or the number of loan applications received by local authorities.
However, as is currently the case, my Department will continue to publish information on the overall number and value of (i) local authority loan approvals and (ii) local authority loan drawdowns. Information up to Q3 2017 is available on the Department's website at the following link: http://www.housing.gov.ie/housing/statistics/house-prices-loans-and-profile-borrowers/local-authority-loan-activity, and this information will be updated on a quarterly basis as additional data is compiled.
The Housing Agency provides a central support service which assesses valid loan applications that are made to the local authorities and makes recommendations to the authorities as to whether loans should be offered to applicants. I have asked the Agency to centrally compile figures of the numbers of applications that it has assessed and the most recent figures, as at the end of May, indicate that the Agency had received a total of 1,499 applications for assessment from local authorities, 1,150 of which were deemed to be valid. Of these valid applications, 876 had been assessed and 52% of the valid applications that had been assessed by the Agency had been recommended for approval.
Each local authority must have in place a credit committee which makes the final decision on applications for loans, in accordance with the regulations and having regard to the recommendations made by the Housing Agency.
With regard to the values of the loans approved to date, figures are not available concerning the breakdown of amounts approved in the manner referred to. However, the Housing Agency have advised that the average loan amount for the 458 applications recommended for approval by the end of May was €189,133.
All Parliamentary Questions I make about Housing, Planning and Local Government and their answers can be viewed in this section