Auctioneers Savills have criticised he government’s housing measures in Budget 2023, decrying “the lack of measures in the budget to foster the supply of housing”, even as it welcomed the extension of the Help-to-Buy scheme and the extension of stamp duty reliefs.
Head of new homes David Browne said: “We’re in the midst of a housing crisis at a time when inflation, construction costs and a scarcity of development finance are making residential development unviable.
"To add to that, our planning system requires a mix of unit types in most locations, some of which are extremely challenging to deliver from a viability perspective, apartments and duplex units primarily, particularly in locations outside major cities.
“This was a missed opportunity by the government to introduce measures that would boost the development of desperately-needed residential supply. For example, while it may not be politically popular, a reduction in the 13.5% VAT rate on the construction of certain residential unit types would have a positive impact on delivery.”
Director of residential lettings Clarie Neary added: “There is a significant under-supply of properties available to rent in Ireland, stemming from an exodus of private landlords from the market.
"While the increase of tax relief on pre-letting expenses is to be welcomed, it’s not enough to incentivise landlords to stay in, or return to the market and boost supply.”
In Association with
Aidan Gavin, managing director at Cushman & Wakefield Ireland, said the increase in the cost of core building products with the concrete product levy will further challenge budgets within the built environment, where building costs have increased significantly since the start of the year increasing viability issues at present.
“Prior to Budget 2023 sentiment in the market reflected a belief that construction costs would ease as 2022 came towards a close,” said Gavin.
“However the levy announcement is likely to change this sentiment. The levy may see the sector push more towards more innovative and environmentally friendly methods of construction, a factor already seen as coming down the tracks, but support for this is still lagging.
“Given that the majority of multi storey commercial and residential schemes are concrete framed structures, this levy will further challenge the viability of marginal schemes and put the delivery of apartments in regional cities further out of reach,” Gavin stated.
Retailer reaction
The budget received a guarded welcome from Retail Excellence, which cautioned that it remains to be seen if the measures announced would be enough to save hundreds of businesses from liquidation before the end of the year.
The Irish Hairdressers Federation declared that the increase in the VAT rate from 9% to 13.5% from the start of March 2023 “will devastate small businesses and heap more misery and price increases on consumers”.
President Lisa Eccles said: "It is totally shortsighted how the government could consider this when our energy bills are up over 400%, costs are up over 10%, and wages are rapidly rising.
‘’Inflation already means they are increasing Vat receipts, so all they are doing is harming small businesses and struggling consumers. If things continue like this, most people will simply be priced out of getting their hair done. The VAT rate for hairdressing in many European countries is 5%, so there is little justification for it.’’
Animation studios welcomed the news that Section 481 tax reliefs for the audiovisual sector are extended to 2024, with chief executive Ronan McCabe commenting: "Section 481 has been crucial in the growth of the animation sector over the past ten years and without it, we just couldn’t compete on the global stage as we do now.
“The relief brings a huge number of jobs and expenditure into Ireland, but it also has an enormous positive impact on creativity and culture. Without Section 481, we might not have seen amazing Irish productions telling Irish stories, such as the Oscar-nominated 'Wolfwalkers'.’’
