A home renovation scheme described as a “boon for the construction industry” should serve as inspiration for the Government to introduce a bigger stimulus to generate house building, an industry leader has said.
Construction Industry Federation (CIF) southern regional director Conor O’Connell said the Home Renovation Incentive scheme had achieved what it set out to do since 2013, and its success could be replicated in a national house-building incentive project.
The Home Renovation Incentive scheme was introduced in 2013 as a measure to assist homeowners and contractors after the during the fallout from the economic crash to upgrade their homes.
The scheme enables homeowners or landlords to claim tax relief on repairs, renovations, or improvement work such as a new fitted kitchen, which is carried out on their main home or rental property by tax-compliant contractors and subject to 13.5% Vat.
It has cost the exchequer some €46.25m up to the end of 2016. More than 9,000 tradespeople have undertaken work on 52,000 properties across the country, with an average of almost €16,000 spent on each job, according to Revenue statistics.
Revenue said it expects the €46.25m figure to rise to over €85m when all tax credits are claimed.
The incentive is paid in the form of a tax credit at 13.5% of qualifying expenditure, which can be set against income tax over two years, effectively reducing the rate of Vat to zero on qualifying work, up to a value of €30,000.
The scheme has seen a number of extensions but has not been made permanent. The chance to make it permanent lies with the finance minister at budget time.
Despite calls for it to be made permanent this year, its long-term future remains up in the air.
According to data from the latest Consumer Market Monitor by the Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School, the scheme has seen €1.6bn spent and up to 30,000 jobs supported.
The chief executive of industry lobby group Guaranteed Irish, Bríd O’Connell, said the scheme’s retention is vital. “Guaranteed Irish campaigned extensively in the leadup to the Budget 2018 announcement, on behalf of our construction members, for the retention of the Home Renovation Incentive, among other Government initiatives,” she said.
“Stimulating the construction industry is not just about new builds — it is also about the repair, maintenance, and improvement of current building stock. The Home Renovation Incentive scheme has been hugely successful, and provided a boon for the construction industry.”
Mr O’Connell cautioned against making the scheme permanent.
The CIF southern regional director said: “It has had a very good impact on both contractors and home- owners and has achieved in many ways what it was set up to do. It has been especially significant for smaller contractors.
“However, I would always be wary of any scheme that goes on ad finitum. It was put in place for a reason at a difficult time to stimulate the sector and has done that. Keeping it forever may lead to unintended consequences. I would prefer to now see schemes and incentives that would stimulate housebuilding and focus on more residential property becoming available.”
Spending on household goods is up almost 13% this year, making it the highest growth sector of retailing in 2017, according to the Consumer Market Monitor.
SOURCE: Irish Examiner
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