Budget 2018 – the changes that will affect the property market

Budget 2018 – the changes that will affect the property market

Budget 2018 took place earlier today with housing one of the big beneficiaries.

Here MyHome.ie looks at what the changes will mean for the sector.

Social housing

  • A total of €1.83 billion was allocated to housing in Budget 2018, with 3,800 new social houses to be built by local authorities and approved housing bodies nationwide.
  • The Housing Assistance Payment Scheme was also increased by €149 million which Minister for Finance Paschal Donohoe said would enable an additional 17,000 households to be supported and accommodated in 2018. The increased funding will support the rollout of the HAP Place Finder Service, aimed at helping households to move out of emergency accommodation and into rental properties.
  • Funding for homeless services will increase by €18 million to more than €116 million
  • 4,000 extra social housing units are to be delivered next year with a commitment given to accelerate the delivery of social housing from 2019.
  • An extra €500 million was given to the direct building programme which will see 3,000 additional new build social houses by 2021, increasing the existing target of social housing homes to 50,000, of which 33,500 will be delivered through construction.
  • A further €75 million of funding was also given for the second phase of the Local Infrastructure Housing Activation Fund which combined with local authority contributions has the potential to provide approximately 5,000 homes at more affordable levels by 2021.

Property investment

  • The level on stamp duty on commercial property transactions will rise from 2% to 6% from midnight tonight.
  • The vacant site levy will double from 3% in the first year to 7% in the second and subsequent years in an attempt to stop developers from hoarding land. The measure will mean that any owner of a vacant site on the register who does not develop their land in 2018 will pay the 3% levy in 2019 and then become liable to the increased rate of 7% from 1 January 2019. If land owners continue to hoard land in 2019, they will pay 7% in 2020, resulting in an effective vacant site levy of 10% over the two years.
  • The seven-year period owners must retain qualifying assets to enjoy full relief from Capital Gains Tax has also been reduced from seven to four years. In his Budget speech Minister Donohoe added: “In order to encourage owners of vacant residential property to bring that property into the rental market for a minimum of four years, I am introducing a new, time-limited deduction for pre-letting expenses”.
  • A new house-building entity Home Building Finance Ireland was also announced to boost construction. It will invest in commercially viable residential projects and will receive €750 million from the Ireland Strategic Investment Fund

Mortgages

  • Mortgage interest relief will be cut next year in a move that will affect about 300,000 homeowners. The relief for people with loans from 2004-2012 is being continued to 2020 but at just 75% the rate in 2018, 50% in 2019 and 25% in 2020.

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