As part of the Irish Government's continued focus on housing, a "Housing Summit" was held in early January 2023. It involved stakeholders such as landlords, homebuilders and politicians. Predictably, tax was a key concern.  

There are significant voices calling for a reduction in the rate of VAT, in order to reduce residential building costs. This has been a longstanding request of those building and funding new housing developments (property developers and institutional property owners). VAT (at 13.5%) is a tax on the supply of new homes, which can never be recovered when the property is put to rent. Measures to reduce VAT should, at least in theory, be of direct benefit to those buying, building or renting new homes. 

Smaller landlords, which are typically individuals holding 1 or 2 properties, are calling for a reduction in the rate of tax applicable to rental income. Currently, it is at 52% for individuals but there does appear to be strong political support for changes. This is evidenced through measures introduced in Finance Act 2022. Whether there is political appetite for further changes, involving a broad based reduction in the rate of tax, is unclear.

While funding, tax and planning all appear to have a role in housing development, tax is perhaps the most complex issue. This is for a number of reasons. Firstly, Irish history is littered with ill-considered tax policy impacting the property market. Secondly, tax changes take time to implement, and do not always achieve the desired results. Market participants may actually slow the rate of building until there is clarity on the future tax position. Thirdly, given the diversity of owners in the market, ranging from large international investment funds to small individual owners, it is going to be difficult to find a measure that satisfies all parties. If tax measures are being considered, it is suggested, they should be focused on increasing supply of new housing. In this aspect, the VAT position might represent the most significant area where certainty is required.