Removal of residential construction levy is a ‘gift’ to developers, committee hears

Scrapping levies on residential construction represents a “gift” from the taxpayer to “well-heeled developers”, the Oireachtas Committee on Housing has heard.

The committee was questioning Minister for Housing Darragh O’Brien following an announcement on Tuesday that Cabinet had signed off on the suspension of development levies, to stimulate more construction activity by making it cheaper to build homes.

Scrapping the development levies, paid to local authorities, would save up to the value of €12,650 per home on average, the Government said.

Independent Senator Victor Boyhan said the move risked “undermining local government”, which used the money collected from development levies to fund local services.

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“It isn’t the Government paying, it’s the taxpayer paying, so the taxpayer is going to bail out developers yet again,” Mr Boyhan said. Many of these developers were the same businesspeople who had lobbied for the recently scrapped strategic housing development (SHD) system, claiming they would build more homes if they had fast-track planning granted directly by An Bord Pleanála, bypassing the local authority system, he said.

“These are the same people that have planning permissions, that are sitting on sites with planning permission they say are not viable,” he said.

“When I’m in business and it’s not viable I move to something else. I make some arrangement to make my business viable or get out of business, but now here we are bailing them out. It is simply a gift.”

Mr Boyhan said he acknowledged there were “real issues” about the cost of construction, “but the issue here is the perception the Government is using taxpayers’ money to bail out a lot of very well-heeled developers”.

People Before Profit TD Richard Boyd Barrett said waiving the development levies was “very, very misguided”. Previous financial incentives and subsidies for developers to encourage construction had not resulted in more or cheaper homes, he said. “There’s not even conditionality linked to the waiving of these development fees, so any idea that it is going to bring down prices is fantasy.”

Social Democrats TD Cian O’Callaghan said Mr O’Brien had indicated the removal of the levy would result in reduced costs for buyers. “What safeguards are there to ensure that the savings will be passed on to individual buyers?”

Mr O’Brien said removal of the levies was “fundamentally an activation measure” to “ramp up housing supply” and would be in place for one year only.

“It is a targeted measure and the measure will last from today, the 25th of April, and not later than 24th of April next year.” In addition, he said, the homes must be completed by the end of 2025. “This is not one that will be extended.”

Local authorities would not be at a financial disadvantage as a result of the waiver, he said. “They will submit the waivers that they’ve received and we will be paying them on a monthly basis the full amount,” he said. “So no local authority will be left out of pocket.”

The measure was expected to cost the State €308 million for the year, Mr O’Brien said, and would represent a “significant reduction in cost” for builders. “I can’t say that all of those development levy [waivers] are going to be passed on, I know that they won’t, but I would expect some of it would be, but I would also expect that it will ensure that developments that would not have started will now start.”