herald

Thursday 8 December 2016

Cash incentives for developers to sell homes below the market value

Alan Kelly
Alan Kelly

DEVELOPERS who sell homes at below-market value will be given cash incentives as part of a desperate government bid to tackle the housing supply crisis.

A string of sweeteners for builders and landlords are to be introduced by Environment Minister Alan Kelly, along with new rules aimed at protecting tenants.

For the first time, landlords will have to give three months' notice prior to eviction and will be offered concessions for entering into long-term lease arrangements. Under Mr Kelly's plan, some 7,650 affordable homes in Dublin will be unlocked by the end of 2017 at a cost of €180m to the taxpayer.

The ambitious plan will target developers with large land banks, such as those with at least 50 new homes, and which already have planning permission.

There are 21,000 planning permissions in the Dublin area active at present.

Longboat Quay
Longboat Quay

Mr Kelly is concerned that many apartments currently being built are being put on the market at prices in excess of €300,000 - out of the reach of many first-time buyers.

Sources said the Government is willing to refund developers "in return for accelerating the delivery of new homes at increased volumes and at prices that are more affordable".

It is envisaged a landlord who sells a €300,000 home in Dublin next year for €270,000 would be compensated by the State.

However, the size of the sweetener offered will reduce from 2017 in a bid to fast track the provision of homes from next year.

Sources said that the principle of the radical plan has been agreed within Government.

However, the funding of the scheme will be discussed by Mr Kelly and Finance Minister Michael Noonan at a special pre-budget meeting today.

Mr Kelly has proposed that the €180m plan be funded by either an increase in the local property tax or Exchequer funding.

However, Mr Noonan has already pledged to freeze property tax rates until 2019.

Meanwhile, the package due to be thrashed out today also aims to introduce so-called 'rent certainty' for both tenants and landlords.

In relation to landlords, the plan proposes to provide tax reliefs to landlords who house low-income families for a minimum of five years.

This is to address the crisis of landlords refusing those on rent supplement and other state benefits.

The incentives set to be offered include 100pc interest relief on borrowings for landlords who let for a minimum of five years to welfare recipients. At present, relief of 75pc is offered.

There will also be concessions for those property owners who enter into long-term leases.

Central to the plan for tenants is the decision to link rent prices to the rate of inflation in a bid to tackle spiralling accommodation costs. This will be a short-term measures until 2019.

Chunk

Meanwhile, Dublin City Council (DCC) was silent last night on proposals to part-fund the €4m fire safety repairs at Longboat Quay from property tax receipts.

The Herald yesterday revealed that Minister Kelly wants a chunk of the local authority's property tax income to go towards the repairs.

DCC last night did not respond to a request for comment on the proposal, nor did the Longboat Quay management company which represents residents.

One apartment owner, Nina Buckley, said she doesn't believe DCC funding repairs out of its property tax take is the right solution to the problem.

She said it is wrong that taxpayers' cash would be used to "fix someone else's mistake".

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