Richard O'Donoghue (Limerick County, Independent) | Oireachtas source

I have been in construction all my life, with over 30 years of experience, and am still in construction on a daily basis. I start work on site at 7 o'clock in the morning because most of the Departments I deal with do not open until 9 a.m. or 9.30 a.m. I get my day's work done in the morning before I come to work at all. That keeps me in tune with inflation, labour and material costs and all of the different sectors of infrastructure. I try to bring my experience to this. In 2021, a 1,700 sq. ft house cost €231,540. There is a 13.5% VAT rate cost of €27,540 included in that, meaning the cost before VAT was €204,000. Today, in 2024, that same house costs €350,000. It is almost €119,000 dearer for the same house. The person is only getting the same package but paying €119,000 more. Before VAT, that house is €308,000. The Government now places a cost of €41,630 in VAT on the same new house that the person was getting in 2021. How is anyone - teachers, nurses, gardaí or the people who work in factories - going to be able to afford a mortgage for this house if something is not done about mortgage rates?

At the moment the loan-to-value ratio is 90%. That is fine if the market is stable and one is trying to reach that figure, but people's wages will not allowed them to get to that figure. Why not have a 95% loan-to-value ratio? The Government could go to the Central Bank. The guarantee from the banks is 90% but the Government could guarantee the extra 5%. When I look at the maths of it, the Government would actually be guaranteeing nothing in the context of that 5% because it would gather it back through the VAT on the inflation cost. The Government is actually holding the €15,000 extra that purchasers would need. On a house with a purchase price of €350,000, with a loan over 35 years and a 95% ratio, the cost to the person would be €332,000. The 5% deposit would be €17,500. For a family with a combined gross income of €67,000, this would be 24.2% of gross take-home pay. If the Government uses the extra VAT it is taking on the inflated costs, this would cover the 5% we are looking for. Looking over the ratio of mortgages in this country, there is only a 4% default.

This change would mean that people who are renting at the moment and want to buy a house would have the opportunity to do so as they would only have to come up with a deposit of €17,500, rather than one of €35,000. With the VAT rate on the purchase price of the house, the Government is getting that money up front in any event and that would cover the 5%. As I said, houses that previously cost only €231,000 now cost €350,000. For a house with a purchase price of €500,000, a 95% loan would cover €475,000, so a purchaser would have to come up with €25,000 as a 5% deposit. Again, if one looks at the VAT rate on that, the Government is actually holding that in any event.

We should come up with something to help people to qualify for a loan from the banks and cover the 5%. That would allow people to get on the ladder. This is for people who are working and want to provide a house for themselves. They are paying taxes to the Government for working and they would pay taxes for buying their own property, but the inflation costs mean they cannot get on that ladder.

I am a father of four. Two of my sons are saving for a house at the moment. I am a building contractor. You would imagine my sons would have no problem, but every time they go to try to get to the deposit they need for the mortgage, the price of the house is increased.

Then there is the concrete levy being put on houses. It is on all concrete products. Again, we are going back to the person who is working or a person who wants to downsize, having worked all their lives, to allow for the next generation. The tax regime is only hurting the people who work. Why can we not do something to help the working person? The worst off at the moment are the working middle class. They qualify for nothing across the board, but they work and pay taxes for everything. They work and pay taxes for the people who are vulnerable and cannot work. Why can we not look at something like this and use the extra money the Government is taking off them for the purchase of a new house and use a 5% guarantee along with the banking system? Does that not make sense? Does it not make sense for a person who is in finance? There is no risk to the Government because it already has the extra inflationary costs since 2021. This would help people get on the ladder and into houses. It would also deal with the inflation costs. That is what common sense would tell me in the context of the housing market, and it is one way of trying to get people the loan-to-value they want. Looking at all the statistics the Minister gave us and the different things we have, this is a way forward for people.

We also have to look at building houses. To qualify to build social houses, you have to have contracts to the value of millions. There are a lot of smaller contractors that could go in. Let us look at the likes of Mungret in Limerick. The sites are serviced and could be given to the contractor ten houses at a time. That would give the smaller contractor the chance to build these houses rather than going to the big companies. Many of the big companies squeeze out the smaller contractors and ensure that they cannot get on the ladder. The smaller contractors could probably provide these houses to the State at a cheaper price than the bigger contractors and bring a bit of competition back into the market.

Another think to look at is the Central Bank reviewing banks outside Ireland providing mortgages. Would the 5% guarantee by Government that I mentioned not allow competition back into the market, where our banks are thriving after the taxpayers of Ireland bailed them out? Why can we not bring competition back into the country to ensure that the banking sector lends to people? The same people who dug the banks out are now looking to be dug out in order that they can provide homes for the future. If we look at all the cost rentals across the board, any couple renting has to show disposable income at the end of the month in order that they can afford a mortgage, but rent is not taken into account. It is their current disposable income that is taken into consideration, so, again, if they are renting they are caught. We need to do something to ensure that we have a generation of people who can get on the housing ladder, even with the inflated costs that exist. The Government needs to put a guarantee on the moneys it is taking in by means of VAT from those costs. That would cover what we are looking for, so it would be cost-neutral based on the figures from 2021 to 2024. The Government would be helping working-class people in order that they could create a life for the generation to come.

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