Measures introduced in the Budget relating to the Irish commercial property market, will provide the basis for renewed international investment in Ireland.
CIF Director General Tom Parlon, commented on the range of measures as essential aspects any modern country should implement for their construction sector to flourish and meet the growth needs of the economy.
"The reduction in commercial property stamp duty, the introduction of a specific Capital Gains Tax incentive and the removal of uncertainty relating to upwards-only rent reviews in existing commercial leases will help translate increased international investor interest into transactions in the Irish market. This investment, in turn, will help bring about greater stability in the financial system and ultimately encourage economic activity." said Mr Parlon.
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The measures announced include a reduction in the stamp duty rate for commercial property transfers from 6% to a flat rate of 2%. This reduction will not only encourage future commercial acquisition but is envisaged to have a positive effect on the construction jobs industry. Another bonus is the relaxation in Capital Gains, permitting a relief in the taxation attributable to that seven-year holding period on all property bought from now until the end of 2013.
Mr Parlon has also welcomed measures aimed at facilitating home ownership through increased mortgage interest relief for those planning to buy in 2012. Both sets of measures will help to stabilise activity levels in the property construction sectors:
"The constraints on mortgage finance and fear amongst potential buyers has depressed transaction to well below normal levels. This announcement provides a very significant financial incentive for those who wish to buy in 2012. Any measure that helps stabilise the residential property market is extremely significant from the perspective of the overall macro-economy in Ireland."
CIF has however, also expressed concern that no plan to help counter the annual loss of €2 billion to the Exchequer through the growing black economy in construction services:
"The black economy in construction services, particularly in the domestic repair and maintenance and one-off house building sectors, is costing the Exchequer up to €2 billion per annum. A range of options were open to the Government to encourage increased investment in these areas whilst clawing-back some of the lost income from the black economy."
