Updated 2.20pm

MINISTER FOR FINANCE Paschal Donohoe has announced a string of new measures in Budget 2018 that he said he will help to alleviate the housing crisis in this country.

“Housing remains a crucial priority for this government,” he said. “I am very aware of the corrosive impact of homelessness on those in our society.”

He pledged almost €2 billion for housing next year, broken down into increases to the Housing Assistance Payment (Hap) scheme and funding for direct builds of new social houses.

Some of these initiatives will not kick in until 2019.

Donohoe explained: “An increase of €31 million has been allocated to the Social Housing Current Expenditure Programme bringing the total to €115 million. This will deliver an extra 4,000 social housing homes next year.

In addition to the substantial extra resources that I have provided for housing in 2018, I am today also announcing an additional commitment to further accelerate the delivery of social housing from 2019.

“I am providing an extra €500 million for the direct building programme which will see an additional 3,000 new build social houses by 2021, increasing the existing Rebuilding Ireland target of social housing homes to 50,000, of which 33,500 will be delivered through construction.”

Vacant sites

The Finance Minister also had some tough talk for so-called land hoarders who have been apportioned blame for the current housing crisis.

“The message to vacant site owners is clear… you need to get on to developing your lands urgently,” he said when announcing harsher penalties.

He said that the vacant site levy will more than double from 3% to 7% on land not sold by 2019.

What this means in practical terms is that any owner of a vacant site on the register who does not develop their land in 2018 will pay the 3% levy in 2019 and then become liable to the increased rate of 7% from 1 January 2020. If they continue to hoard their land in 2019, they will pay 7% in 2020, resulting in an effective vacant site levy of 10 per cent over the two years.

The Minister also outlined the tapering off of mortgage interest relief. From next year, it will be reduced to 75% of current relief and will eventually fall to 25% in 2020.

Mortgage interest relief is a tax relief based on the amount of interest paid in a tax year on a qualifying mortgage loan. (Basically, you can claim tax back on mortgage interest payments). It was initially put in place to help those in negative equity following the bust. Fianna Fáil had wanted to retain the full relief but had conceded to the cuts during negotiations.

Donohoe said the government was reducing the seven-year period owners must retain qualifying assets to enjoy full relief from capital gains tax to four  years.

Here are the measures outlined by Donohoe in housing:

• €750 million of the Ireland Strategic Investment Fund will be made available for commercial investment in housing finance.
• A new body will be set up called Home Building Finance Ireland (HBFI) to facilitate this. Donohoe said that it would help to avoid “distortion in the market”. He wants local authorities to provide 8,300 new social homes next year.
• An additional 3,800 new social homes will be provided from 2019 with an extra €500 million for direct building.
• Increasing Hap by €149 million. He said an additional 17,000 homes and households would be supported by this increase.
• Funding for homelessness services will increase by €18 million to €115 million.
• Landowners who leave their sites idle will be penalised with a vacant property tax. This will rise from 3% in 2018 to 7% in 2019. “The message to vacant site owners is clear,” Donohoe said. “Develop your land urgently.”
• Stamp duty on commercial property will rise from 2% to 6%.