Pearse Doherty (Donegal, Sinn Fein)
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103. To ask the Minister for Finance the measures he is taking through tax and credit policy to encourage the supply of rather than the demand for housing; and if he will make a statement on the matter. [4311/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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In view of the housing supply challenge I introduced a Stamp Duty refund scheme in Finance Act 2017 which is intended to stimulate the provision of residential accommodation by providing for a partial refund of stamp duty paid on the acquisition of land where that land is used for the development of housing. The refund scheme has a number of conditions that are designed to ensure that only those builders and developers who provide completed housing units within a reasonable period of time can qualify for a refund of the difference in the amount of stamp duty payable at the rates of 2% and 6%.

Finance Act 2017 also provided for a change to the CGT relief for land and buildings which applied where development land and residential/ commercial property was purchased between 7 December 2011 and end-2014 (the qualifying period) and held for seven years. The change in the law allows individuals retain the right to sell those assets subject to the relief at or after the current seven year limit, but will allow for full CGT relief on any gain to apply if a qualifying asset which was purchased during the qualifying period is sold at any time between the 4th anniversary of its purchase and the 7th anniversary of that purchase. This change could help encourage and promote the sale of assets such as development land and existing residential properties, which qualify for the CGT relief, as there would be no need to wait for the full seven years to elapse in order to enjoy full relief from CGT.

In Budget 2018 I announced a new, time-limited deduction for pre-letting expenses incurred on property that have been vacant for one year or more.  The purpose of this relief is to encourage owners of vacant property to bring that accommodation into the rental system, thereby increasing the overall supply of residential accommodation.

This measure was an option put forward in the report of the Working Group on the Tax and Fiscal Treatment of Rental Accommodation Providers. The report outlines the current situation in the rental accommodation sector, summarises the main issues raised in a public consultation conducted by the working group, and puts forward ten potential policy options for consideration.  The measure introduced in Budget 2018 was prioritised as it was specifically designed to encourage an overall increase in housing supply by bringing currently vacant property back into residential use.

The Help-to-Buy (HTB) initiative introduced in Budget 2017 provides a tax rebate for first-time purchasers to assist them to fund the deposit required to purchase or self-build a new house or apartment to live in as their home. One of the policy aims was to encourage the additional supply of new housing. My Department commissioned Indecon to complete an independent impact assessment of HTB in March 2017. The report was published as part of Budget 2018 and it found that there was some evidence of improvement in the supply of housing in the Irish market since the introduction of HTB. However, as supply inevitably takes time to respond, any identifiable overall impact of HTB on supply is likely to be only seen over time.

As part of the assessment, 55 contractors were surveyed by Indecon. The contractors indicated they had built or commenced building on 3,098 housing units since the measure was introduced and firms in this sample were planning on building 12,752 additional new housing units over the next three years. Most of the contractors suggested that the HTB scheme had encouraged them to commence building new units.

While not constituting a taxation measure, the Deputy will be aware that section 86 of Finance Act 2017 provides for an exploration of the key issues in relation to the potential application of a tax on vacant residential property, to be reported on within 9 months of the passing of the Finance Act. I consider that the objective to be met by such a tax would be to increase the much needed supply of homes for rent or purchase to meet the growing demand. 

The Ireland Strategic Investment Fund (ISIF) is making a very substantial contribution to new private housing supply which is critical in terms of meeting the pent up demand for housing across all sectors of the market. In line with its double bottom line mandate, ISIF has already invested in a number of significant financing platforms and projects in the construction sector, and is actively examining other investment opportunities.