Calls to reduce VAT rates to soften cost increases

As material prices continue their upward climb, an independent TD is calling for a reduced VAT rate on building materials in ROI while the Federation of Master Builders is looking for VAT cuts in the NI renovation sector.

Material price increases since January 2021, due to Covid, Brexit, and lack of felling licences among others, have left self-builders and renovators picking up the tab. 

Reducing VAT rates is one way stakeholders are proposing to counteract spiralling costs.

Cut VAT for ROI self-builders, says TD

Independent TD Richard O’Donoghue is calling for a 9 per cent VAT rate on building materials in ROI, a motion he plans to put to government after the summer recess. 

“We have a housing crisis, a materials crisis, a crisis at the ports and a felling licence crisis,” O’Donoghue told the Dáil.

“All of these crises are causing problems for people who [are] building or renovating homes and who are trying to make sure that they and their children will have a roof over their heads at an affordable price. I have worked in construction all my life and I have never seen the like of it.”

O’Donoghue now tells Selfbuild the government should step in to reduce the VAT rate on building materials, to soften the blow of material price increases.

“Two years ago you could get steel mesh for €56 a sheet, up to six months ago it was €72 a sheet, now some suppliers are quoting between €109 to €118. You can’t budget with price increases like that.”

“Contractors can’t give people a price to build their house when costs are escalating between six and 20 per cent,” he added.

“An average house used to cost €120 per sqft up to six months ago,” he told Selfbuild in July. “Now it’s €165-170/sqft in rural areas. It’s putting self-builders under undue pressure, and a way to help them is reduce the VAT rate. The government has it in its power to do that.”

Cut VAT for NI renovations, says FMB

A problem in NI, say the Federation of Master Builders and the Centre for Research into Energy Demand Solutions, is that the VAT rate on renovations are too high to encourage homeowners to undertake an energy upgrade.  

In a new report, Building on our Strengths, the pair has five key recommendations, one of which is to reduce the VAT rate for renovations to 5 per cent to “reduce the cost of building works”. 

Other proposals include upgrading the building regulations and introducing Building Renovation Passports to provide more information to householders about making their homes more energy efficient.

New builds in NI are VAT exempt and you need your receipts to get your refund at the end of the build, which may or may not be a straightforward process

What do you think?

Written by Astrid Madsen

Astrid Madsen is the editor of SelfBuild & Improve Your Home magazine. She previously held the same role in an Irish trade publication, before that she worked at the National Standards Authority of Ireland. She graduated with a BA in Urban Studies from Columbia University in New York and holds an MBA from the Instituto de Estudios Bursatiles in Madrid. France of origin, she now lives in Portarlington, County Laois, where she's taken on the task of renovating a listed building! Email astrid.madsen@selfbuild.ie

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