Focus on: Housing

Oct 09, 2018

A lack of affordable housing coupled with a lack of supply in the wider market has brought the housing situation to crisis point. Acknowledging that “where we find ourselves today is not where we want to be”, the Minister promised to increase capital spending on all housing measures by 26 percent on 2018 numbers to €2.3 billion. Much of the Budget measures are aimed at fixing supply issues and the only measure announced for the rental sector was for landlords. From January 2019 they will be able to get a 100 percent deduction against rental income for interest on certain loans.  

Landlords - deduction for interest

  • In an apparent effort to stop landlords leaving the rental market, from January 2019 landlords will be given a 100 percent deduction against rental income for mortgage interest arising on any loan used to buy, improve or repair a residential rental property. Budget 2017 had promised to restore the relief to 100 percent on a phased basis by 2021 but the relief has now been accelerated.

Mortgage interest relief

Although not specifically referenced in the Minister’s Budget speech, a commitment was made in last year’s Budget to extend mortgage interest relief on a reducing basis for owner occupiers who took out qualifying mortgages between 2004 and 2012.

From 2019, relief will be reduced to 50 percent of the qualifying interest while the rate will be 25 percent in 2020. The relief will cease on 31 December 2020.

Local property tax

There were no changes to local property tax announced although the Minister said that following on from the public consultation that took place earlier this year, he noted the concerns that rising property prices have caused. Any future changes will therefore be “moderate and affordable”.  A report, arising from the public consultation will be published in due course.

Other measures:

  • Although not mentioned in the Minister’s speech, it seems that the Help to Buy scheme will be retained until 2019.
  • There was no mention of the heavily rumoured grant scheme for people who want to convert their homes into smaller units, which could then be rented out – the so called “granny flat” incentive.

Social and affordable housing

  • €1.25 billion has been allocated for the delivery of 10,000 new social homes in 2019 to be delivered via construction, acquisition and leasing.
  • An extra €121 million will be allocated for the Housing Assistance Payment in 2019 to provide an additional 16,760 new tenancies.
  • An additional €30 million will be provided for homelessness services in 2019
  • €310 million will go towards an affordable housing scheme over three years. Individuals earning up to €50,000 and couples earning up to €75,000 will be eligible for the scheme. Up to a €50,000 discount is available on the infrastructural funding and funding for the first sites will be announced later this month.