Six steps to increase housing supply and stimulate growth in the economy – CIF

If 10,000 more housing units are built per year, an additional 25,000 people will be employed in the construction sector, according to the Construction Industry Federation (CIF).  This would also restore residential construction activity to levels needed to meet the growing high levels of demand. The CIF have proposed six steps for inclusion in October’s budget, aimed at increasing levels of house building as well as stimulating further recovery in our economy.  CIF has called on the government to implement the following policies in the upcoming budget:


–          Introduce a ‘Help to Buy Scheme’ to assist first time home buyers.

–          Introduce a tax incentivised savings scheme for future purchasers of new homes.

–          Replace Part V – social housing obligations for new developments- with a 1% levy on sales of all residential units.

–          Introduce a temporary VAT rate of 9% for residential construction for a two year period.

–          Restoration of 100% tax deduction on the interest expense incurred on loans to investors in residential property.

–          Reduction of Capital Gains tax to 20%.


The current housing crisis is a complex situation.  It is widely acknowledged that the house building industry must increase drastically the current levels of house building.  The ESRI estimates that 25,000 units must be built every year in order to meet demand, but at the moment we’re only building in the region of 11,000 per year.  Shortage of new housing is a key factor contributing to house price inflation, and rental inflation due to the construction industry not being in a position to fund recovery of construction activity to the required levels.

Speaking about the plan, Tom Parlon, the Director General of the CIF said: “As both the economy and the construction sector recover, these are the key challenges that must be addressed in order to maintain growth in the economy.  The provision of homes requires input from our industry first and foremost to construct enough houses to meet the demand.  This can only be achieved however with a supportive regulatory and policy environment from our Government.

“In demographic terms, population growth is predicted to reach 600,000 between now and 2031, 60% of which will need to be accommodated in the greater Dublin area. Ireland needs buildings and infrastructure to support its economic growth, support continued foreign direct investment and maintain the country’s economic competitiveness in stimulating further growth.

“We must look in detail at the impediments that are affecting recovery of construction activity and the ability of builders to build, the ability of purchasers to purchase, and the ability of renters to rent. We need a sustainable solution to the current impasse where construction activity, particularly in the greater urban centres, is less than half of the level of activity that is warranted as we speak.


“We need to address the basic question of who is going to be able to afford to build and who is going to own the new buildings that Ireland as an economy needs to support its continued economic growth” he concluded.


Some of the other proposals in the pre-budget submission are heavily focused on the Public Capital programme, and on stimulating interest in construction careers and education:


  • Significant increases in the public capital programme
  • Extending the State contribution to final bidders’ costs for Public Private Partnerships (PPPs) to all PPP competitions.
  • Rebate of statutory Redundancy Payments to newly hired construction workers.
  • Extend the JOBSPLUS scheme to the ‘Wet Trade’ apprenticeships.
  • Removed current student levy on apprentices.
  • Financially support the work of the Construction Safety Partnership (CSP).
  • An ‘opt in’ facility for Class S PRSI contributors to include entitlement to jobseeker’s and illness benefit.


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