Ireland has \u201centered a race to the bottom\u201d when it comes to measures aimed at boosting the supply of apartments, and it risks creating communities \u201cpeople don\u2019t want to live in\u201d, a top academic has said.<\/p>\n
Orla Hegarty, an architect and assistant professor at the School of Architecture, Planning, and Environmental Policy in University College Dublin, was reacting to recent measures outlined by the Department of Housing along with the costly Vat rate reduction for apartments that was announced in this week\u2019s budget.<\/p>\n
\u201cThe way things are heading, chasing smaller and smaller apartments, we could waste a lot of resources building them and find out they\u2019re not suitable or what people need,\u201d she said.<\/p>\n
In Tuesday\u2019s budget, one of the marquee announcements was a cut in the Vat rate on the sale of completed apartments from 13.5% to 9%. The cost of this measure is estimated in the hundreds of millions a year, and it will last until the end of 2030.<\/p>\n
The Government said this was to address the \u201cviability gap\u201d in apartment construction and activate unstarted planning permissions.<\/p>\n
The minister for housing James Browne said that targeted tax measures in the budget are an \u201cimportant step toward unlocking Ireland\u2019s apartment pipeline\u201d.<\/p>\n
\u201cThey are designed to tackle the financial barriers that have been a challenge to apartment construction in recent years,\u201d he said.<\/p>\n
It received broad welcome in some quarters, such as from the Society of Chartered Surveyors in Ireland and Savills Ireland.<\/p>\n
Annette Hughes, the director of economic advisory services at EY Ireland, said some 14,000 apartments with planning permission in Dublin have not commenced due to viability issues.<\/p>\n
\u201cThe reduction in Vat to 9% for the construction of new apartments will further help to bridge the viability gap for apartment construction in our cities and on brownfield sites.\u201d\u00a0<\/p>\n
However, the move was roundly criticised by opposition parties. Labour\u2019s housing spokesperson Conor Sheehan said it was a \u201cGalway tent budget\u201d for developers ahead of the public,<\/a> while his Social Democrats counterpart Rory Hearne said \u201cprofits are bound to be pocketed\u201d by developers and funds through the scheme.<\/p>\n \u201c[This] Budget is a clear return to the bad old days and has all the hallmarks of something cobbled together while attention was elsewhere,\u201d Mr Sheehan said.<\/p>\n On Friday, trade union Unite also hit out at the measures as a \u201cbonanza\u201d for developers.<\/p>\n \u201cRather than ploughing over \u20ac500m into tax breaks for developers, the money should have been used together with some of the windfall Apple tax money to develop a public construction company mandated to build truly affordable homes on public land,\u201d regional officer James McCabe said.<\/p>\n Supports for developers to make apartments more viable had been long flagged by the Government ahead of the budget.<\/p>\n During the summer, Mr Browne brought proposals to Government to reduce the minimum size of apartments as well as removing the requirements around the mix of apartments in private developments.<\/p>\n He claimed this could result in up to a reduction of \u20ac100,000 per unit in the cost of building apartments.<\/p>\n