Verona Murphy (Wexford, Independent) | Oireachtas source

I will speak for eight minutes and share my remaining time with Deputies Canney and Shanahan, who will have eight minutes and four minutes, respectively.

I have spoken on the topic of housing more than anything else in the Chamber. It is regrettable the Minister, Deputy O’Brien, is not present. No matter what way we discuss this issue, it is about the basic economics of supply and demand. Until such time as we solve the supply issue with housing, we are never going to be able to deal with the demand. The definition of cost rental, as based on the LDA website, states:

Cost Rental is a new housing tenure that was created under the Affordable Housing Act 2021. It offers a long-term, secure rental option that will contribute to the development of a sustainable housing market in Ireland which provides choice across all tenures. The rent on these units is based on the cost of building, managing, and maintaining the homes.

As it is part of the 2021 Act, it is probably well outdated because costs have increased exponentially and Government has not brought anything forward that is reducing cost. As a matter of fact, every time it takes a measure, it increases costs.

Cost-rental or affordable homes are not being bandied around very much, particularly in Wexford. It is horrible to stand here, after all the work and money which has been spent, and say that we built modular builds for €442,000, which have a C2 energy rating. They are almost eligible for a grant for an upgrade. They are modular builds. Affordable my tonsils. It is actually head wrecking for people to try to comprehend where this is going wrong. There are solutions, but Government continues to throw good money after bad policy. The bad policy, that is, our planning policy, has been pointed out a number of times. It is a policy based on transport-orientated infrastructure. We were told only last week of the 50,000 grants of planning in Dublin which will not be commenced because they are not viable.

I believed for a long time that civil servants in the Department and politicians understood what viability was, but clearly they are not tackling the problem. A lack of viability is where the economic cost of something outweighs the benefits. Therefore, if 50,000 proposed units with planning permission are not built, it is because it costs more to build them than they can be sold for. That is the complaint of the builders and developers, whom the Government has not been listening to. If it continues not to listen, we will continue to have these conversations.

I have made a proposal in this regard several times. It is not just mine as it has also been made by builders and developers, because we know how much pressure builders and developers are under from a financing perspective. Who in their right mind would finance something that would cost more to build than it could be sold for? Very few, except the Government, which will continue to subsidise unviable building.

In the context of the fact we now know the Government is going to miss its housing targets for 2024, it is time to look at the bigger picture and introduce a measure it has refused steadfastly to introduce, namely, a VAT rate of zero for new builds. This has been introduced in the UK, including Northern Ireland, and it is the very boost a first-time buyer unable to obtain a mortgage under macroprudential rules requires. The extension of the provision stipulating an amount that is four times one’s earnings no longer cuts it because of the cost of building. People just cannot afford the mortgage. At least if we removed the VAT, it would effectively mean a bonus of €40,000 to €50,000 for a first-time buyer. We could then apply the first-time buyer's grant to second-hand properties, so someone who could afford only a second-hand property or could not avail of a new build would have an option.

How can this be done? It is done very simply. In this regard, let me refer to the criteria in the UK. To have first-time buyer status there, the buyer should not have previously owned or had a major interest in any residential property. The property purchase price must be lower than £625,000 – luckily, we are still below that here, although I am not sure for how long – and the property must be intended as the main family home. The rate of zero is applied exclusively to individual purchases. It is applied to a single dwelling only and is not applicable to non-residential construction. What could be fairer than that?

In 1997, the then Minister for Finance, Charlie McCreevy, did not just cut capital gains tax – nobody was selling anything as the rate was 40% - rather, he halved the rate to 20% and in so doing increased the tax take. Surely everybody in this House, on the left and right, can understand that 13.5% of nothing is nothing. If we do not do something radical, we will not have commencements or see cost-rental, affordable or other housing. People know it. The builders, developers, the CSO and the ESRI know it, and every newspaper in the country is reporting on it. There was a missed opportunity in this area in the budget, I am afraid, but now is the time to rectify the problem and introduce the radical measure I propose.

The Government will miss its targets this year and will not be able to set targets that are achievable next year, or even in the next ten years, and we have a deficit of more than 250,000 houses. Therefore, the Government is a long way off solving the supply-and-demand issue. I will not repeat myself but simply state that until such time as this is addressed, we will have a major crisis. It is affecting our foreign direct investment. We have seen poor infrastructural planning and poor infrastructural investment in our water and electricity services. How has it served us? A €35 billion Amazon project is to be moved to France, Spain or Germany. It was ours for the taking, but because of our poor planning and poor planning policy on top of our infrastructure planning issues, we have lost it. The Government has lost it. Therefore, it is time to sit up, take notice and start listening to the people who know – the builders and developers. Like it or lump it, we cannot proceed without them. Any notion we could set up a public building company to take care of this matter is only that – a notion – because Irish Water, which is ten years in being, is not being resourced properly. It is time to sit up and take notice.

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