The UK Government is being implored to reinstate Section 23 tax incentives for construction companies and property developers in the imminent budget, to augment the availability of rental properties. The original tax discount scheme, discontinued post-financial crisis, permitted investors substantial tax reductions for refurbishing or purchasing properties (primarily in urban centres) intended for the rental sector.
Ipav, the Institute of Professional Auctioneers and Valuers, suggests this support could permit an investor to counterbalance taxable rental revenue by purchasing a new property to lease. The original stipulation provided full rental relief, typically based on the property being rented for a decade, it highlighted.
Ipav’s head, Pat Davitt argued that the acceleration and expansion of housing supply is vital, for inhabitants, the economy, and for societal coherence in our communities. He said, “The acute scarcity of homes is unanimously acknowledged but often discussed foremost in political and conceptual discussions without adequate emphasis on the market truths of what genuinely succeeds in delivering affordable housing.”
He proposed that a series of steps should henceforth be put into motion to incentivise investment, specifically by small to medium-sized enterprises. Mr Davitt acknowledged that these suggestions might be met with doubt by authorities, but he contends overlooking them would be a grave error, as they have succeeded in the past.
Critics of the original tax-relief program argue it was overly indulgent, leading to ill-suited and unsuitable developments in numerous locations while fuelling imprudent lending.
Mr Davitt insisted positive incentives are effective, favouring them to rent control measures, which he believes dissuade investment. He referred to recent development levy exemptions and reimbursements of Uisce Éireann water and wastewater link-up fees to support his argument.
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