AIB: give land­lords a break and ex­tend help-to-buy scheme

Bank says early de­ci­sion will al­low builders and de­vel­op­ers to plan ahead

Sunday Independent (Ireland) - - Sunday Business - Michael Cog­ley Busi­ness Cor­re­spon­dent

AIB has called on the Gov­ern­ment to level the play­ing field be­tween pri­vate land­lords and their in­sti­tu­tional coun­ter­parts.

The State-owned bank also urged Fi­nance Min­is­ter Paschal Dono­hoe to ex­tend the help-to-buy scheme be­yond 2019 as soon as pos­si­ble to avoid an “in­evitable scram­ble” by prospec­tive buy­ers ahead of Oc­to­ber’s bud­get.

In its sec­ond an­nual re­port on the Ir­ish hous­ing mar­ket, it also warned that con­struc­tion labour has be­come a “scarce re­source” and that it will be­come a ma­jor chal­lenge for new hous­ing sup­ply.

AIB’s head of real es­tate fi­nance, Don­all O’Shea, said the bank plans to fund around 5,500 res­i­den­tial units this year, up from 4,700 in 2018.

“In line with 2018, this re­port shows that — to make real change in the level of sup­ply in the short-term — vi­a­bil­ity, labour, pol­icy ini­tia­tives and so­cial and af­ford­able hous­ing are key is­sues,” O’Shea said.

In the re­port, AIB also stated that the help-to-buy scheme was “work­ing ef­fec­tively” but that it has had very lim­ited im­pact on res­i­den­tial prop­erty prices. The scheme, which was launched in Oc­to­ber 2016, of­fers a tax re­bate on in­come tax paid, which can be used as a de­posit on a newly-built home. It was ex­tended for an­other year in the bud­get but is set to ex­pire this Oc­to­ber.

AIB said that there was a “no­table up­swing” in the vol­ume of new homes bought by first-time buy­ers. The to­tal num­ber of first-time buy­ers of new homes went from 2,107 in 2016 to 4,387 in 2018.

“An early de­ci­sion to ex­tend the scheme would avoid an in­evitable scram­ble by prospec­tive buy­ers to trans­act in the months lead­ing up to Oc­to­ber and would al­low de­vel­op­ers to plan with greater cer­tainty for 2019 and be­yond,” the bank said.

The coun­try’s big­gest lender also stated that the Cen­tral Bank’s macro-pru- den­tial rules were be­com­ing an “in­creas­ingly bind­ing con­straint”, cit­ing the fact that the pro­por­tion of first-time buy­ers bor­row­ing be­tween 3.25 and 3.5 times their in­come rose to 31.8pc last year.

The most re­cent fig­ures from the Res­i­den­tial Te­nan­cies Board have also shown a size­able drop-off in the num­ber of land­lords ser­vic­ing the rental mar­ket. Ac­cord­ing to the board’s De­cem­ber data, there were 1,778 fewer land­lords in 2018 than in 2015.

AIB called for re­form of the tax code for pri­vate land­lords and stated that they should be “en­cour­aged” back into the mar­ket. The cost of build­ing a new home was also cited as a sig­nif­i­cant is­sue.

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