[Article] Dublin house prices to soar as levy increases

Victor

http://home.eircom.net/content/irelandcom/topstories/1596847?view=Eircomnet

Dublin house prices to soar as levy increases
From:ireland.com
Thursday, 2nd October, 2003

The price of new homes in Dublin is set to jump sharply as local authorities dramatically increase the amount they levy on developers.

Housebuilders are objecting to the proposed development contribution scheme and have called for the appointment of a regulator to scrutinise council charges.

Mr Matt Gallagher, president of the Irish Home Builders Association, accused local authorities in Dublin of trebling the levies imposed on developers and said that, if agreed by councillors, they would add up to 5 per cent to the price of a new house.

Proposals from Fingal County Council will see a charge of €140 per sq m levied on new homes in its area. Increasing housing densities and the growth of the apartment market has reduced the average property size, but that figure would still mean a €11,480 bill for developers on an 82 sq m property that the council says is the average in its borders.

A more traditionally-sized three- or four-bed semi-detached property would attract a charge of around €17,500.

Housebuilders have indicated that such costs would inevitably be passed on to buyers as part of the price of a new home. That would also see them attract VAT at 13.5 per cent and stamp duty at rates of up to 9 per cent.

Dublin City Council is proposing a €10,500 charge per housing unit, while South Dublin County Council plans a €5,000 charge for one-bedroom accommodation and €10,000 for two-bed.

Dún Laoghaire Rathdown will submit its plan to councillors on October 13th.

The charges were decided after a report commissioned by the four authorities determined that the cost of infrastructural projects up to 2010 would amount to about €11,000 per property built in that time once Government and EU contributions were taken into account.

Mr David O'Connor, director of services for planning and economic development at Fingal Council, said the new charges, provided for in the Panning and Development Act 2000, had been welcomed by councillors.

For the first time, developers will be forced to pay for the cost of providing community services in developments, including parks. They will also be obliged to fund the cost of infrastructural work associated with development.

"Representatives are tired of being accused of putting people in fields with no facilities, but the previous system did not allow us to charge for such facilities and the money was not available elsewhere," said Mr O'Connor.

Mr Gallagher maintains the charges are unfair and unduly onerous on homebuyers.

"In the budget last year, the Government abolished the first-time buyers grant, increased the rate of VAT on construction to 13.5 per cent and now councils want to add another stealth tax on house buyers.

"It is unfair that the housebuying public and builders are bearing the entire cost of these levies, which are of benefit to the community."

Mr O'Connor welcomed an end to the more haphazard previous levy regime which, he said was regularly the subject of appeal by developers, but Mr Gallagher questioned the legality of the new rules "whereby local authorities can introduce new charges without having an appeals procedure in place".

He said it contrasted sharply with the practice for providers of other services, who were all overseen by independent regulators.

The new arrangements must be in place by March 2004 and will be ring-fenced to ensure that the money raised is not diverted to pay for general local authority expenses, including the cost of benchmarking.

Of course I think what he means is "It is unfair on the currently very profitable developers, that the housebuying public are bearing the entire cost of these levies, which are of benefit to the community, but might reduce builder's margins, even if they are passed on in full."