Levy may push new Dublin home prices up 5%

The price of new houses in Dublin will increase by more than 5 per cent following the introduction of additional development levies by Dublin City Council, a builders' group said today.

The decision to impose an additional €8,000 will raise the levy to €11,500. It was adopted by the council last night, but could be "legally flawed", according to the Irish Home Builders' Association (IHBA).

It is understood purchasers of affordable housing will be exempt from the levy, which will affect the 13 electoral areas that are incorporated under the council's jurisdiction.

The IHBA said today it was "dismayed" by the move and said that the levies are in effect "a return of property tax by the back door".

A press statement released today read: "This is a step too far for house buyers. It is counter productive, it will have a negative impact on housing output and employment and it will result in a fall in government revenue from the housing sector."

The decision was taken in "an arbitrary manner as opposed to the manner prescribed by law", according to the IHBA.

The association has called for the Minister for the Environment and Local Government, Mr Cullen, to "provide for the independent scrutiny of the development levies introduced by Dublin City Council and currently being considered by local authorities nationwide and to appoint a regulator to monitor the introduction of all development levies proposed by local authorities in order to protect the interest of consumers".

The Dublin City Council claims the hike merely incorporates existing costs, that would have amounted to circa €8,000, into one all inclusive cost.

The Dublin City manager, Mr John Fitzgerald, said the money raised would be used by Dublin City Council to provide amenities such as community facilities, leisure complexes, and all-weather pitches for parts of Dublin that the council could not provide for before.

Of the total revenue generated 57 per cent will go to engineering requirements, 17 per cent will be spent on roads, 10 per cent will be allocated to community regeneration with a combined 16 per cent providing for recreational areas and community facilities such as creches.

Earlier in the week, Dublin City Council announced that it would not be imposing a levy on home extensions like some of its neighbouring councils.