Scrapping VAT for first time buyers could slash "almost €40,000 off the price of a new house in Galway", and be a positive move to help young couples secure a home.
This is the view of Independent Galway West TD Noel Grealish. He made this call as part of a pre-Budget submission to the Minister for Finance, Pascal Donohue. He said that while the Government was "putting great store in the potential" of the newly announced Land Development Agency to increase the availability of new housing stock, any benefits from this approach will all be in the longer term.
Dep Grealish said "something radical" must be done "right now" to help those struggling to get on the property market. He noted how, when tourism was struggling at the height of the economic collapse, the then government acted quickly, reducing VAT from 13.5 per cent to nine per cent. “Taking the same step in relation to first time buyers of new houses," he said, "but going a step further by reducing the VAT payable to nil for a limited period, would make a real impact."
'House prices are continually rising, increasing the pressure of demand on the rental sector, where rents are also spiralling out of control'
The average price for a new house in Galway city currently is about €285,000. According to Dep Grealish, removing the 13.5 per cent VAT for first time buyers would cut €38,475 from that price. He noted that in Northern Ireland, people do not pay VAT on new houses and this has resulted in a much more stable market than in the Republic. “There is a lower rate of price increases, good availability of new homes within the first-time buyer market, and greater affordability — the average home there costs just over €180,000," he said.
The Independent TD said that scrapping VAT for a period of two to three years would give first-time buyers a real chance to get a home that they might otherwise have to wait for a decade or more to achieve at the current rate of progress.
“The way house prices are continually rising at present is making it more and more difficult for couples trying to buy a home," he said. "In turn that increases the pressure of demand on the rental sector, where rents are also spiralling out of control. A cut of something like €40,000 in the price they would have to pay for a new house would certainly make it more achievable.”