Budget 2020: What does it mean for the industry?

Budget 2020 brought no surprises, but it is fair to say that it was met with some criticism. In terms of housing and property, the help-to-buy scheme has been extended for two years and this is welcome news to those here delivering new homes to the market, and indeed for those first-time buyers who are struggling to buy a new home. There will be no changes to its form and it will continue under the same legislation until December 2021. Previous talk of reducing the eligible property values came to nothing, thankfully, and it is positive to see that nothing will change (except that buyers will have a longer period to avail of it).

Landlords who are already feeling the strain may not be happy to see that the RTB will receive an additional €2 million to ensure rent pressure zones are enforced and ensuring that new policies are adhered to. There are currently 44 RPZs in Ireland and rent supply is still as big an issue as it has been for several years.

The Living City Initiative, which is a tax incentive scheme for special regeneration areas, has been extended to the end of 2022.

Housing Assistance Payment (HAP) has been increased by €80 million to address social tenants already living in private rental properties, as well as for new tenants, which is welcome but it certainly doesn’t solve the problem of rental supply across the country. In fact, one of the major things to take from the budget is the Government’s lack of action on affordability, for both private renters and for home buyers who are effectively priced out of the market, despite not being eligible for social housing. This leaves average income earners squeezed out of the market, struggling to maintain high rents, with little hope of ever owning a property.

The homelessness budget has also been increased by €20 million, bringing it to €166 million. Tackling the housing issues in this country continues to be an uphill battle for the Government with homelessness figures exceeding 10,000 people and that sadly includes 4,000 children, according to the Department of Housing. As we know this is an increased figure from August 2018 when there were over 9,500 people listed as homeless.  Finance Minister Paschal Donohoe indicated that the €166 million allocated will be spent on emergency accommodation, as well to offer long-term support and day services. Regardless of this additional funding, it is expected that homelessness figures will continue to rise next year – something that was stated by opposition parties on Tuesday. There is something very wrong (or perhaps rotten?) about how these resources are being used, but that’s a much larger conversation for another day.

In total, €2.5 billion will be allocated to the Housing Programme in 2020. Government has allocated capital funding of €1.1 billion to social housing, announcing that 11,000 new social homes will be delivered in 2020, with a further 12,000 in 2021.

Significantly, commercial stamp duty saw an increase of 1.5%, despite jumping  from 2% to 6% in recent years. This is purportedly to encourage developers to build more residential homes…(we have no explanation for this). Further announcements included an additional €17.5 million to the Land Development Agency; €186 million for the Serviced Site Fund and Local Infrastructure Housing Activation Fund for 2020. Finally, €130 million funding will also be made available for urban regeneration and development, however, the geographical spread is unclear at this stage.