Tag Archives: investment
Finance access and VAT are key barriers to housing supply in Ireland
Access to finance and input costs such as VAT are the key barriers to increasing the housing supply in Ireland, according to new research from chartered surveyors. In particular they say that the introduction of rent certainty measures have forced private landlords out of rental sector and that treating residential investors on par with commercial property investors is needed. The Society of Chartered Surveyors Ireland (SCSI) is calling for a reduction of VAT to 9% for houses under €300,000 and the establishment of a finance agency to support house building. Over half of the 300 chartered surveyors who took part in the survey said the introduction of rent certainty measures by the government was one of the main reasons private landlords are exiting the sector. The other reasons cited were the indebtedness of private landlords and tax restrictions. SCSI president Claire Solon said that reducing VAT on affordable housing and establishing a Development Finance Agency with expertise in construction lending were measures the government should introduce in the upcoming Budget. She pointed out that the ESRI has estimated that Ireland needs to build 25,000 residential units per annum, with the bulk of them being required in the capital. However in the second quarter of 2016 planning was only granted for 2,590 units in Dublin, of which only 620 have commenced construction. ‘The VAT reduction for the hospitality sector has worked extremely well. We would like to see a similar reduction to 9% for a defined period focusing on houses under €300,000. We feel such a move, access to finance for builders and a Capital Gains Tax ‘holiday’ for a set period to free up development land, are three measures which would provide a much needed kick start to house building,’ she said. She explained that the return of boom era rents caused by the shortage of housing supply together with the slow gearing up of the construction sector meant Ireland might not be in a position to avail of any opportunities created by Brexit unless swift action was taken. ‘It is crucial for the Government to address the depletion in investor activity in the overall residential market. One solution would be to apply the principles of commercial property investment to residential development and investment. Specific measures which would help level the playing field would be to reinstate full mortgage interest relief and to remove USC and PRSI on rental income,’ she pointed out. The survey found that the most significant challenge facing provincial towns and villages in Ireland was the inadequate provision of broadband services. In its submission the SCSI calls on the Government to provide additional funding for the roll out of reliable, high speed broadband services in all rural and provincial areas, a doubling of the Town and Village Renewal Scheme Grant Scheme to €20 million and an overhaul of the regulations of the… Continue reading
UK property prices up in August despite Brexit worries
House prices in the UK increased by 0.6% in August and are now 5.6% above a year ago, according to the latest index figures to be published. This continued growth takes the average price of a home to £206,145, the data from the Nationwide shows, indicating that an expected fall due to Brexit has not yet materialised. The pick up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months, according to Robert Gardner, Nationwide's chief economist, saying that this includes a softening of new buyer enquiries to the introduction of additional stamp duty on second homes in April and the uncertainty surrounding the EU referendum. Meanwhile, the number of mortgages approved for house purchase fell to an 18 month low in July. ‘However, the decline in demand appears to have been matched by weakness on the supply side of the market. Surveyors report that instructions to sell have also declined and the stock of properties on the market remains close to 30 year lows,’ Gardner explained. ‘This helps to explain why the pace of house price growth has remained broadly stable. What happens next on the demand side will be determined, to a large extent, by the outlook for the labour market and confidence amongst prospective buyers,’ he pointed out. He believes that it is encouraging that the unemployment rate remained at a 10 year low in the three months to June, though labour market trends tend to lag developments in the wider economy and it is also positive that retail sales increased at a healthy rate in July, up almost 6% compared to the previous year, even though consumer confidence fell sharply during the month. ‘However, business surveys suggest that the manufacturing, services and construction sectors all slowed sharply in July, and, if sustained, this is likely to have a negative impact on the labour market and household confidence,’ he said. ‘Most forecasters, including the Bank of England, expect the economy to show little growth over the remainder of the year. Indeed, these concerns prompted the Bank’s Monetary Policy Committee (MPC) to implement a range of stimulus measures at the start of August, which will provide support to economic activity and the housing market. Monetary policy measures will provide some support for households and the housing market,’ Gardner commented. ‘The MPC’s decision to lower UK interest rates from 0.5% to a new low of 0.25% will provide an immediate benefit to many mortgage borrowers, though for most the boost will be fairly modest. The MPC’s stimulus measures will also provide indirect support to the housing market, and not just by boosting wider economic activity,’ he added. According to Nicholas Finn, executive director of Garrington Property Finders, the data reveals a property market that is still unsettled rather than upbeat. ‘On the front line we’re seeing some strong intent but a lack of clarity among buyers. The cut in interest rates and resilient… Continue reading
Third of UK tenants fund energy improvements instead of landlords
A new report reveals that a third of tenants in the UK have paid for energy efficiency improvements despite recent Government legislation that requires landlords to do so. Currently landlords are required to bring their property up to the minimum Energy Performance Certificate (EPC) rating E. Under the legislation, which came into force on 01 April 2016, if a tenant requests a more efficient home and the landlord fails to comply, the landlord could ultimately be forced to pay a penalty notice. However, the study conducted by online letting agent PropertyLetByUs, shows that one in six tenants have paid for roof insulation, 7% have paid for double glazing and 92% have paid for draft excluders for windows and doors. A further 71% have paid for their boiler to be repaired. The research also shows that 88% of tenants want their landlord to install a more fuel efficient boiler, while 78% want their draughty front door replaced, 72% want more loft insurance and 48% want double glazed windows fitted. Properties with EPC ratings of F and G will be progressively banned from the market, starting with rental homes with new tenancies. That will become the legal minimum for private rented properties when new regulations come into force in England and Wales from 2018. The Residential Landlords Association estimates that a total of 330,000 rental homes in England and Wales are likely to be affected. Though Government officials have estimated it could cost landlords between £1,800 and £5,000 to bring energy-inefficient properties up to an E rating, according to PropertyLetByUs it could be tenants that have to fund the improvements. ‘Our research shows that is falling on tenants to pay for energy improvements to their rented properties which is simply unacceptable. Many tenants are finding that their landlords are refusing to make improvements to the property, leaving tenants no choice but to dip into their own pockets,’ said a spokesman. ‘Tenants should not have to pay for roof insulation and repairs to old boilers, when it is the landlord’s responsibility. Landlords should comply with the current legislation that requires them to make energy efficiency improvements and they also should start improving their properties, if they have an EPC rating of F or G, so they are brought up to the required standard by 2018,’ the spokesman added. The Government has recently given guidelines on the costs with a typical package of measures for a small semidetached house. Gas central heating and low energy lighting is estimated at £4,000, loft insulation at £300 and cavity wall insulation at about £500. The firm also pointed out that the Government will need to put measures in place to ensure that landlords are compliant or it fears that the financial burden on tenants could be even greater. Continue reading
