Forword
Mr. Noel Dempsey T.D., Minister for the Environment and Local
Government and Mr. Robert Molloy T.D., Minister for Housing
and Urban Renewal have announced a range of measures
which are being taken by the Government following on the
recommendations of the House Price Study undertaken by Peter
Bacon and Associates, Economic Consultants.
This leaflet provides a summary of the Report's main
recommendations and the action being taken to help restore
balance to the housing market and to provide for orderly growth
of housing output into the coming years.
Summary of action on main recommendations of House
Prices Report
MAIN RECOMMENDATION
ACTION TO BE TAKEN
1.
The following actions are being
A number of key
taken to address infrastructural
constraints on the
constraints:realisation of housing
supply in Dublin, in
terms of
water/sewerage and
road infrastructure,
have been identified. It
is considered that, if
the potential of housing
land is to be realised
effectively there will
have to be a
considerable
investment undertaken
in the improvement and
development of
infrastructure.
(a)
(a)
Applications for funding
the Serviced Land
under the Serviced
Initiative (water/sewerage)
Land Initiative should
to fund release of land for
be reviewed and
housing is being increased
funding increased to
from £15m to £30m. The
allow a larger number
Minister for the
of projects to proceed.
Environment and Local
Priority should be given
Government will shortly
to the Dublin region in
announce details of the
particular.
first £15m allocation under
the Initiative.
(b)
(b)
For larger schemes,
the Public-Private
Partnership (PPP)
approach should be
considered.
(c)
(c)
In limited cases where
the main constraint is
road infrastructure
which, up to this, has
not been recognised as
a specific objective and
where action needs to
be taken which cannot
be funded within the
current non-national
roads programme,
additional resources
should be made
available to local
authorities on a similar
basis to the existing
Serviced Land
Initiative.
2.
the Department of the
Environment and Local
Government will now
identify water and
sewerage schemes that
might be suitable for
execution by way of PPP.
a provision of £5m is being
made available to help
local authorities to target
(on the same basis as the
Serviced Land Initiative)
areas where roads
infrastructure is a key
constraint.
Stamp duty rates for residential
Reduced rates of
property will be reduced as
Stamp Duty to apply - follows with effect on and from 23
second hand houses
April, 1998.
up to £60,000 - 0%;
House Existing
Proposed
£60,001 - £170,000 Price
Rates
4%; £170,001 various
up to
£500,000 - 5%; above
rates up Zero
£60,000
£500,000 - 9%. These
to 5%
thresholds to be
£60,001
reviewed periodically
to
6%
3%
with regard to
£100,000
increases in average
£100,001
6%, 7%
second-hand house
to
4%
and 8%
prices.
£170,000
£170,001
to
9%
5%
£250,000
£250,001
to
9%
£500,000
Over
9%
£500,000
7%
9%
The existing rate structure will
continue for transfers of land and
non residential properties.
The new band structure for
residential property will operate
as follows:
(a)
the adjusted (i.e. lower)
stamp duty rates on
second-hand houses and
apartments will apply to
conveyances dated on or
after 23 April, 1998.
(b)
stamp duty at the new
rates will be charged on all
new houses and
apartments bought by
non-owner occupiers and
will apply to contracts
entered into on or after 23
April, 1998. All
conveyances after 30
September 1998 for new
houses and apartments
bought by non-owner
occupiers will attract
stamp duty regardless of
the date of the contract.
(c)
to avail of the stamp duty
exemption for new houses
a person buying a new
house or apartment will at
the time of purchase be
required to state in writing
that they intend to reside
there and undertake to
3.
Repeal of 'Section 23'
relief for investment in
private rented
accommodation from a
current date.
4.
Remove deductibility of
interest on borrowings
undertaken for
investment in
residential property,
against rental income
for personal income tax
purposes from a
current date.
notify Revenue if within
the first five years of
ownership they let the
property. Upon notification
to Revenue, the individual
will have to pay the
amount of stamp duty that
would have been paid if
they had purchased the
house or apartment as an
investor from the outset.
Failure to notify Revenue
will be an offence with
appropriate penalties.
Under the new Urban Renewal
Scheme to be introduced on 1
August, 1998 tax incentives will
not be available on a blanket
basis as previously. The case for
TSection 23U relief will be
critically evaluated in the case of
each area to which an Integrated
Area Plan relates and the
possible impact on house prices
will be a factor in considering the
application of the relief. TSection
23U relief will only apply in any
area where it is shown to be
absolutely necessary for the
achievement of the objectives of
the Integrated Area Plan.
In the case of rental income from
residential property of an
individual, partnership or
company the interest on
borrowed monies employed on or
after 23 April, 1998 will not be
allowed as a deduction for tax
purposes. This will operate as
follows:
(a)
the interest on borrowed
monies employed on or
after 23 April, 1998 to
purchase a residential
premises (or to purchase a
site and construct a
residential premises) will
be disallowed
(b)
there will be transitional
relief where there is a
binding contract in writing
before 23 April, 1998 to
purchase such a premises
(or site and construct) and
the borrowed money was
employed for that purpose
by 30 September 1998
(c)
5.
Stamp Duty should be
payable on purchases
of new houses by nonowner occupiers.
6.
Capital Gains Tax
(CGT) on development
land: a rebate of 50%
should be available on
serviced land zoned
residential brought into
residential
development in the
next four years, to be
financed by a
surcharge of 50%
thereafter on CGT on
development land.
the interest on loans for
improvement or repair of
rented residential property
will not be allowed except
in the case of properties
already owned by the
investor before 23 April,
1998 or where covered by
a similar transitional relief
as specified in (b) above.
The rates of stamp duty for
residential property as mentioned
above will apply to purchase of
new houses or apartments by
non-owner occupiers to take
effect for all binding contracts
entered into on or after 23 April,
1998
A reduced CGT rate of 20% will
apply for a period of four years to
the disposal on or after 23 April,
1998 of development land for
residential development in
accordance with appropriate
amendments to the Finance Acts
which will be introduced as a
matter of urgency. It is intended
that at the end of the 4 year
period disposals of zoned
serviced land should be subject
to a 60% CGT rate.
7.
Shared Ownership:
(a)
(a)
The effective income
limits for eligibility
under the present
scheme should be
raised to £20,000 for
single income
households with
appropriate increase
for two income
households.
(b)
The income limits under
the scheme will be revised
by the Minister for Housing
and Urban Renewal in line
with the consultants'
recommendation, with
immediate effect.
(b)
The structure for
financing the local
authority share of the
equity should be
reviewed with a view to
being able to offer a
lower rent.
(c)
(c)
Private sector shared
ownership instruments
should be encouraged.
8.
9.
The rent charge is being
reduced from 5% to 4.5%
for transactions completed
after 1 May, 1998.
The Minister for Housing
and Urban Renewal will
consider the scope for
private sector shared
ownership in consultation
with mortgage lending
institutions.
The Minister for Housing and
In the context of low
Urban Renewal will bring this
interest rates mortgage recommendation to the attention
lenders should
of mortgage lenders for their
consider offering
consideration.
mortgages with longer
repayment structures,
say up to 35 years, with
a fixed interest option
for the first 5 to 10
years, to borrowers
with lower incomes.
The Minister for Finance will
Central Bank to carry bring this recommendation to the
out on-site
attention of the Central Bank
examinations of lending
institutions' practice in
relation to their written
policies regarding
mortgage lending, the
aim being to ensure
that an adequate duty
of care to customers is
being exercised by
mortgage lenders.
10.
(a)
(a)
The Minister for the
Environment and Local
Government has
appointed two additional
board members to An
Bord Pleanala following
enactment of the Local
Government (Planning
and Development) Act,
1998. The Minister has
already approved
significant increased
staffing resources for the
Bord and will keep the
situation under review to
see if additional measures
are required.
An Bord
Pleanala should
be assured of
sufficient
resources to
ensure that
appeals can be
dealt with in 4
months or less;
(b)
(b)
there should be
adequate
resources at
local authority
level to ensure
that statutory
time periods for
assessing
planning
applications are
adhered to and
delay avoided.
11.
A voluntary Code of
Best Practice for
builders would be
beneficial to limit the
occurrence of practices
Greatly increased financial
resources under the new
system of local
government finance will
enable local authorities to
devote increased
resources to planning
development and control.
The Director of Consumer Affairs
is pursuing the question of a
voluntary code of practice with
representatives of lending
institutions, housebuilders and
the Law Society.
such as excessive
stage payments. If this
does not work widening
of the statutory role of
the Director of
Consumer Affairs in
this area should be
considered.
12.
The Minister for the
Environment and Local
Government should
utilise powers under
the Planning Acts to
direct planning
authorities to adopt a
more pro-active
approach towards
increased density
developments at
locations which would
contribute to
sustainability.
13.
A review of all
Development Plans in
the Dublin and MidEast regions, based on
Strategic Planning
Guidlines, to identify
the scale and location
of future development,
based on the principles
of sustainability, should
be undertaken and
adopted soon after
completion of the
The Department of the
Environment and Local
Government has commenced an
initiative to promote higher
densities, particularly in
brownfield sites and near town
centres, public transport nodes
and access points and is
consulting planning authorities,
the architectural, planning and
auctioneering professions and
the house building industry in
relation to the greater Dublin
area.
Planning Guidelines will be
issued in relation to residential
densities and in advance of this,
planning authorities will be
advised to promote increased
densities in appropriate locations,
and of the safeguards required
and the steps they should take in
this direction.
The Minister for the Environment
and Local Government will ask
the planning authorities to review
their development plans in the
light of the Strategic Planning
Guidelines when completed and
will bring forward proposals for a
statutory requirement on local
planning authorities to ensure
that their development plans are
consistent with any relevant
Strategic Planning Guidelines.
Guidelines.
14.
A comprehensive land
use analysis relating to
the Dublin and MidEast regions should be
undertaken and
subsequently updated
at regular intervals
under the direction of
the Department of the
Environment and Local
Government and the
resultant information
made available to
relevant interests.
15.
16.
Such information would normally
be made available as part of the
survey carried out prior to the
review of a development plan.
The Minister for the Environment
and Local Government will ask
local authorities to publish such
information.
This recommendation will be
The bring forward of
brought to the attention of
lands other than those planning authorities in the Dublin
already zoned for
and Mid-East regions by the
residential
Minister for the Environment and
development or
Local Government.
proposed to be zoned
in Draft Development
Plans should await the
conclusions of the
Strategic Land Use
Guidelines which are
being prepared for the
Dublin and Mid-East
Regions. In advance of
the guidelines, any
necessary variations or
material contraventions
of Development Plans
should be guided
strictly by the principles
enunciated in
"Sustainable
Development - A
Strategy for Ireland".
This recommendation will be
The development
considered in the preparation of
potential of settlements the Strategic Land Use
with existing or
Guidelines for the Dublin and
proposed high quality Mid-East regions and in the
public transport links
should be prioritised in
the interests of
sustainability. The
improvement of public
transport links to other
settlements in the MidEast region, which
have substantial
residential land banks
should be undertaken.
17.
(a)
context of planning for
investment in the improvement of
public transport links in these
regions.
The Minister for Housing and
Urban Renewal will take these
Land Registry
matters up with the Land Registry
returns should and the Central Bank in the
be used to
context of maintaining an
obtain better
effective information system
information on based approach for analysis of
house prices
house prices and other data
and related data. relevant to policy analysis.
(b)
Additional data
should be
compiled in the
context of
information on
mortgages
collected by the
Central Bank.
Serviced Land Initiative
A £15m allocation of Exchequer funding will be announced shortly by
the Minister for the Environment and Local Government under the
Serviced Land Initiative for water and sewerage projects required to
open up land for residential development. This allocation will result in
estimated overall expenditure of £37.7m in providing essential water
and sewerage schemes to over 6,400 acres and enabling the
construction of over 45,000 housing units as follows.
Area
Total Cost No. of
£m
Acres
14.3
1,130
Dublin Local Authorities
Dublin "commuter belt"
4.4
(Meath, Kildare, Wicklow)
Cork, Galway, Limerick,
8.1
Waterford (including
No. of Housing
Units
14,200
1,020
5,300
2,220
13,400
commuter belts)
Other areas
Total
10.9
37.7
2,030
6,400
12,200
45,100
The original £15m now allocated is being increased with a
further £15m for water and sewerage services and a new
provision of £5m to provide for necessary road access to open
up housing land on the same basis as the Serviced Land
Initiative. The total investment arising from these allocations
should amount to some £85 m over the three years 1998-2000.