The Institute of Professional Auctioneer and Valuers (IPAV ) claim the incoming Government could slash the cost of a new home by €32,000 by making building finance available to small and large builders at interest rates of between 1 per cent to 3 per cent.
The IPAV made the statement in a document sent to all political parties entitled ‘Tackling the Housing Crisis’. The organisation says finance currently available at rates of 15 per cent to 20 per cent is prohibitive to construction and all such costs are passed on to the house buyer.
The IPAV is calling for the Department of Environment, Community and Local Government to be empowered to provide such finance to builders who may wish to participate in an Agreed Price Building Scheme (APBS ), which would be in the region of €100 per square foot, excluding site costs and works. The organisation estimates that both these measures could slash €25,000 from the cost of a typical home.
The organisation said a VAT reduction from 13.5 per cent to 9 per cent could cut a further €7,000 from the price of a home with no loss to the Exchequer since it would benefit from increased volume of house sales. The IPAV says the measures are fail-safe since the Government could borrow from the European Central Bank at historically low interest rates, the money being repaid to the Government as the properties are sold.
Pat Davitt, chief executive of IPAV, said: “Those who can’t rent are falling into homelessness, are being temporarily housed by the State in hotels or are staying longer with their families. Those who can’t buy are renting longer or are being pushed out into the suburbs. Those who build properties are finding the cost of building prohibitive.
“Social change of the nature currently happening as a result of the housing crisis should not happen as a by-product of policy. We need a definitive whole of Government approach planning cohesively and thoroughly for a sustainable property market.”