Builders would have preferred tax break to subsidy scheme - Varadkar

Construction companies and developers are "not happy" with a new State subsidy that could see them secure up to €144,000 in funding for each apartment they build outside the Dublin area, Tánaiste Leo Varadkar has said.

Mr Varadkar said developers would have preferred some sort of tax break or incentive as opposed to the recently announced €450 million Croí Cónaithe cities fund.

The Tánaiste was responding to Social Democrats TD Cian O’Callaghan in the Dáil on Thursday who asked had developers lobbied for the scheme and what level of profits for them would be guaranteed and underpinned by the fund.

The Croí Cónaithe cities scheme will subvent the construction of up to 5,000 apartments in Dublin, Cork, Limerick, Galway and Waterford that have planning permission but remain unbuilt because costs outstrip market values.

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To get the funding, developers must demonstrate there is a viability gap between what the apartment costs to build and the sales price they can achieve.

A national maximum of €120,000 per apartment has been set, but developers building in the regional cities will be able to argue for an increase of up to 20 per cent, bringing the State subvention to €144,000.

Mr Varadkar said having spoken to construction companies and developers recently, “they aren’t happy with this”.

“This is not the scheme that they would have organised or arranged,” he said.

“They would have preferred some sort of tax break or a tax incentive and they’re not particularly enamoured by the Government scheme.

“So I think it’s fair to say that this was not done for them nor was it the scheme that they would have designed for themselves.”

The Tánaiste said the intention behind the scheme was to make the building of apartments “viable”.

“For reasons related to the housing shortage and also for reasons related to the need to tackle climate action, we need a lot more apartments being built in our cities, in Dublin and Cork and in other cities,” Mr Varadkar added.

“It’s not viable to build apartments unfortunately at the moment, because of the cost and this subsidy is designed to make it viable to produce apartments that otherwise would not be built.”

Sinn Féin’s housing spokesman Eoin Ó Broin has previously described the subsidy as “the most crazy housing scheme that I have heard from any Government in recent years”

Mr Ó Broin said the scheme was “a chronic waste of taxpayer’s money at best, locking in unaffordable, excessive prices for apartments and at best driving them even further upwards”.