Are the budget’s tax reliefs and supports enough to ease housing crisis?

After relentless interest rate increases, a new round of temporary mortgage interest tax relief will help 165,000 borrowers next year. At a cost of €125 million, the measure is dwarfed by the billions of euro set aside to build new social homes and support the delivery of affordable housing.

This is in line with the Government’s top political priority: to settle the housing shortage that brings the rising price of buying or renting a home beyond the grasp of many. The allocation of €244 million for homelessness services in 2024 is as stark a sign as any of the depth of a crisis that still seems very far from resolution.

Some 12,691 people were without a home in September, including a record number of children. The money required for homelessness services cannot be spent building the homes needed to prevent homelessness itself. Amid great personal hardship for those with no home, this reflects grave policy failure over a prolonged period in a booming economy.

Concerned that small landlords leaving the private rental market could further fan the flames of crisis, the Government introduced a new rental tax relief. Income of €3,000 in 2024, €4,000 in 2025, and €5,000 in 2026 and 2027 will be disregarded at the standard tax rate. After eviction bans, this presents a special reward to landlords for staying in business. They must remain active for four years or lose the relief, a stricture designed to prolong any market benefit.

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Inevitably, the measure was criticised. Threshold, the housing charity, said relief should be granted only in return for increased security of tenure: “Otherwise it has the potential to be a deadweight cost to the State.” Social Democrat TD Cian O’Callaghan said there was no evidence base for the move. Sinn Féin finance spokesman Pearse Doherty told the Dáil: “We needed a budget for renters, instead we got a budget for landlords.”

As with other housing initiatives, there was a start-stop dimension in Budget 2024. Minister for Finance Michael McGrath extended by one year the liability date for the residential zoned land tax, a measure supposed to spur building by penalising land hoarders. Property interests welcomed the delay but it’s not so long since the Government cast the now postponed tax as a decisive step towards increasing the supply of new homes.

Budget 2024 includes €4.1 billion for the Housing for All master plan: €2.6 billion in capital spending, and €1.5 billion in current day-to-day spending. Additional money from the Land Development Agency, set up to build homes on State land, and funds lent by the Housing Finance Agency, will bring the overall capital provision above €5 billion next year.

“The focus of capital investment in social housing will be on new build – with the funding supporting the delivery of 9,300 new build social homes. Social homes will also be delivered through a continuation of a strategic acquisitions programme,” the Government said.

The plan also aims to deliver 6,400 new cost-rental and affordable purchase homes via other measures. Some 2,130 new social homes will be delivered through various leasing schemes (including mortgage-to-rent and repair-and-lease) delivered by local authorities and approved housing bodies. As schemes chop and change, applicants for local authority affordable purchase can avail of the help-to-buy programmes.

In his speech, Minister for Public Expenditure Paschal Donohoe said he expected more than 29,000 new homes to be built by the end of this year. That’s a similar out-turn to 2022. Still, only a few months have passed since Taoiseach Leo Varadkar said “at least 40,000” new homes were needed every year. There are mountains still to climb.