O’Flynn says Vat proposal is a good idea but too late
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?”
Houses under construction in Dublin: Developer Michael O’Flynn insists it is vital the Government takes steps to cut the cost of development.