LEADING developer Michael O'Flynn has said he is 'not convinced' the current government will take the necessary steps to solve the housing crisis after the Housing Minister announced his intentions to deliver thousands of social homes.
The Cork developer said it was 'critical' that the government takes steps to cut the cost of private sector development in order to motivate significant activity in the housing market.
There is mounting pressure on the Government to take action to solve the homelessness, housing, and rental crisis, with charities and action groups warning that the situation is worsening by the day.
Housing Minister Eoghan Murphy said yesterday that the only way the homeless crisis was going to be solved was to make sure that the country is building far more social housing units than it is currently doing.
The Minister dismissed of a specific State agency being created, in the style of Irish Water, to build social housing, and said he was working on a plan to bring vacant homes back into use.
However, Mr O’Flynn said he does not expect to see measures introduced in the upcoming budget to kick-start building in the private sector.
Fianna Fáil's housing spokesperson Barry Cowen has called for tax cuts for developers in a bid to increase housing stock, but some experts have said this may make matters worse while Sinn Fein has described it as a “breathtakingly stupid” proposal that would only benefit developers.
The proposal would see construction VAT reduced to 9% from 13.5%.
Mr O'Flynn, who is currently developing houses in Ballincollig, Glanmire, Crosshaven, Model Farm Road, Mallow and Kerry Pike, said that cost is proving prohibitive to many developers.
"We are building - but we could be building a lot more," he said.
"Unfortunately, we can't afford to build more because of the costs associated with it. VAT, development charges, the Part 5, which dictates that 10% of the houses have to be social housing - there are a whole host of charges associated with these developments.
"If the government are serious about building, they need to deal with these issues to motivate activity."
A reduction in the VAT rate for development would go a long way towards solving the crisis, Mr O'Flynn said.
"For the last two years, the government should have been motivating activity through tax cuts like they did with the tourism industry where tax was cut from 13% to 9%. Doing it this year is absolutely critical, but it is probably too late.
"There are a whole host of legacy issues to resolve and, ultimately, I'm not convinced that it will be fixed any time soon."
The Cork developer said that current situation has resulted in many investors exiting the market and said that nothing has been done to bring these people back.
"The current situation, including the issues in the rental market and in homelessness, is completely unacceptable," he said.
"The government did not invest in social housing for years but it was a real cop out to expect the private market to be able to make up that difference. Now the Councils are back in the game, we are still playing catch up.
"We have a rental market that is completely unsustainable and nothing is being done to entice investors back."