Budget 2020 – A Quick Overview
€80 million increase provided for housing assistance
payments (HAP).
According to the Irish Times this will add 15,750 new
tenancies to the existing 50,000 social housing tenants already in
privately-owned flats and houses. €1.1 Billion provided by the budget will
support the construction and acquisition of 11,000 new social units in 2020
(12,000 planned for 2021).
Francis
Doherty from the Peter McVerry Trust noted the additional €80
million for the HAP scheme in 2020 was “a recognition that we will remain very
much dependent on the private rental market to accommodate those in need of
social housing and the continuing rise in cost of rent in key urban areas”.
To help with the provision of new affordable homes, an extra
€17.5m is being provided to the Land Development Agency, the Minster also
said.
€186m is also being allocated to the Serviced Site Fund and
Local Infrastructure Housing Activation Fund in 2020.
€2 million in additional funding
will be given to the Residential Tenancies Board
This is to support their
investigations and sanctioning of non-compliance with rent pressure zone
measures.
Help to Buy Scheme
The first-time buyers grant will be
extended for two more years until the end of 2021. The scheme provides for a
refund to first-time buyers of income tax and deposit interest retention tax
(DIRT) that they have paid over the previous 4 years (up to a maximum value of
€20,000) to go towards the deposit on a house.
The Construction Industry
Federation has welcomed the continuation of the Help to Buy scheme but warned
it would not address affordability issues or rising construction costs.
Stamp Duty
Stamp duty on commercial real
estate has increased from 6% to 7.5% with immediate effect. This is the second
increase of stamp duty on commercial real estate in three budgets. 6% will
apply to transactions executed before 1 January 2020, where a binding contract
existed prior to 8 October 2019.
This increase means that Ireland has the 3rd highest stamp duty on commercial real estate in the EU, after Brussels and Luxembourg. This will have a major effect on the decision making of international investors and may cause disruptions to the market stability that is currently in place. The Ministers rationale for this increase was that the market is increasingly performing strongly, and the sector will continue to bear this increase “without significant impact”.
Amendments will also be made to the
legislation which will provide for the repayment of stamp duty where the land
involved is subsequently used for residential development. This is to ensure
that the rate of stamp duty chargeable after a full refund remains at 2
percent.
Property investment funds and
REITs - Anti-avoidance measures are being introduced with immediate
effect.
Revenue identified some IREFs
engaged in “Aggressive behaviour' to avoid tax. Revenue identified the use of excessive
interest charges to shelter profits from Irish property. As a result of
the review, a number of anti-avoidance measures were introduced by way of
Financial Resolution on 8 October 2019 to include new limitations on interest
expenses to prevent over-leveraging and a measure to combat the artificial
avoidance of gains on redemption of IREF units.
In addition, the Donohoe indicated
a number of targeted amendments will be made to the Real Estate Investment
Trust (REIT) regime to ensure an appropriate level of tax is paid on
property gains by a REIT in particular where a REIT leaves the REIT
regime.
