O’Flynn says Vat pro­posal is a good idea but too late

The Irish Times - Business - - BUSINESS NEWS - OLIVIA KELLEHER in Cork

Fianna Fail TD Barry Cowen’s sug­ges­tion that VAT be re­duced from 13.5 to 9 per cent for three years is a good idea but comes “a few years too late”, ac­cord­ing to lead­ing prop­erty de­vel­oper, Michael O’Flynn.

Speak­ing at a Char­tered Institute of Man­age­ment Ac­coun­tants break­fast brief­ing in Cork yes­ter­day, Mr O’Flynn ad­mit­ted that when he read the head­line about VAT re­duc­tions, he knew it would evoke mem­o­ries of the Galway tent and all the “con­no­ta­tions of the past”.

How­ever, he said he agreed with Mr Cowen’s pro­posal and in­sisted that if VAT was re­duced in the Bud­get it would im­me­di­ately re­duce the cost of houses.

“There is no way in the world that if we are not re­turn­ing VAT that we are go­ing to keep it. Peo­ple need to trust the in­dus­try more. I can tell you that the mar­gins back in the 1980s are a lot less than the VAT mar­gins to­day. That is how much the whole sit­u­a­tion has been im­pacted.

“The only way we can in­crease sup­ply is to im­prove vi­a­bil­ity.”

Mr O’Flynn said the Govern­ment should have been mo­ti­vat­ing ac­tiv­ity through tax cuts over the last few years. A cut to the rate of VAT on house build­ing has been ruled out by Min­is­ter for Fi­nance, Paschal Dono­hoe.

Mr O’Flynn says it is vi­tal the Govern­ment takes steps to cut the cost of pri­vate sec­tor de­vel­op­ment in or­der to gen­er­ate sig­nif­i­cant ac­tiv­ity in the hous­ing mar­ket.

One of the big­gest prob­lems for the in­dus­try is over­pay­ing for land. “The plan­ners will tell us there is plenty land. But there isn’t plenty land that’s avail­able. Farm­ers won’t sell land and that is their right. So you have to have land that is zoned, avail­able and in­fra­struc­ture. So there are a lot of is­sues com­ing to­gether there. But un­for­tu­nately, and not ev­ery­body will like me say­ing it, peo­ple are over pay­ing for land. We have to face up to this.”

Mean­while, at a na­tional level Mr O’Flynn says a great deal can be learned from coun­cils in Cork and Meath who have de­liv­ered strate­gic zon­ing plans .

He also ar­gued that the Euro­pean In­vest­ment Bank should be in­volved in this coun­try in terms of in­fra­struc­ture fund­ing.

“Also in re­la­tion to de­vel­op­ment fi­nance per­haps we need

Peo­ple are over pay­ing for land. We have to face up to this

a new ICC type model to sup­ple­ment what our banks can do in terms of their lend­ing to the de­vel­op­ment in­dus­try.”

He added that Ire­land needs to set up an SSIA type struc­ture to at­tract peo­ple in to the in­vest­ment of build­ing prop­erty.

“Why do we have to go out­side the coun­try at all times to solve our own re­quire­ments? Why don’t we set up a struc­ture that peo­ple can in­vest in prop­erty?”

PHO­TO­GRAPH: NIALL CAR­SON/PA WIRE

Houses un­der con­struc­tion in Dublin: De­vel­oper Michael O’Flynn in­sists it is vi­tal the Govern­ment takes steps to cut the cost of de­vel­op­ment.

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