Builders 'dismayed' at levy increase on new Dublin homes

The Irish Home Builders' Association said it is "dismayed" by Dublin City Council's decision to increase levies on new houses.

The association said the move was "counter-productive" and "a step too far". It said the levies amounted to "a return of property tax by the back door". It also warned that the charges would cause job losses in the industry and a fall in Government revenue from the housing sector.

A spokesman for the Construction Industry Federation, Mr Kevin Gilna, said the lack of any appeal process underlined the unfairness of the new system.

On Monday night Dublin City Council voted to levy a charge of €11,500 on all new homes built in its catchment area after next March. The city manager, Mr John Fitzgerald, had proposed a €10,500 charge.

A spokesman for the council said it was decided that no levy should be placed on social and affordable housing. Because of this, there was a shortfall of €21 million for affordable housing. It was decided the best way to make up that sum was to increase levies on new private homes and commercial development. The new home levy was increased by €1,000 and commercial development levies were increased to €110 a square metre, from €100.

Under Section 48 of the Planning and Development Act 2000, local authorities must put the scheme in place by March next.

The measure was introduced to provide funds for infrastructure in new housing estates nationwide. In 2000 the Government argued the rapid development of areas such as west Dublin, where few facilities were provided, must not be permitted to continue.

In Dublin the €11,500 levy will apply to all new houses and apartments irrespective of their value, the council spokesman said. However, charges will vary nationally between €6,000 and €20,000 a dwelling depending on its location. The first review of the new levies will be held in two years.

Fine Gael's spokesman on the environment and local government, Mr Bernard Allen, said the Minister for the Environment, Mr Cullen, was being naive to think the charges would not be passed on to house buyers. He said buyers would even be forced to pay 13.5 per cent VAT on the increases. "To add to the problem, the cost of building materials will also increase because new quarries, which provide the stone and concrete blocks, will also be charged substantial development levies.

"House-buyers are now the scapegoats for gross Government mismanagement and have already been hit by the abolition of the first-time buyers' grants and increased VAT charges as a result of last year's budget."