Reaction to Budget 2025
Sherry FitzGerald has expressed concern over the recently announced increase in stamp duty rates on residential transactions exceeding €1.5 million. The rate, which will rise from 2% to 6%, is effectively a tax on transactions for purchasers. This added cost is expected to place further strain on a market already struggling due to a shortage of housing supply and contracting transaction volumes.
Marian Finnegan, Managing Director of Sherry FitzGerald, commented: "Additionally, the decision to raise stamp duty to 15% for those purchasing 10 or more residential units within a 12-month period is counterproductive given the ongoing rental crisis. Institutional investors have played a critical role in funding and delivering much-needed rental accommodation in Ireland. The government recently acknowledged that achieving a housing target of 50,000 units would require €20 billion annually, with €17 billion coming from private investment. This stamp duty increase runs contrary to that objective."
Sherry FitzGerald supports the initiatives introduced to aid the housing sector but views Budget 2025 as a missed opportunity to tackle the private rental market crisis.
Ms. Finnegan further noted: "The absence of substantial policies to address the persistent issues in the rental market is deeply disappointing. The supply of rental properties has significantly declined in recent years as private investors exit the market. For every new investor, two to three are leaving, leading to an anticipated loss of 15,000 tenancies in this year alone. While the increase in the renter’s tax credit to €1,000 offers some relief, it covers just over 5% of the average annual rent in Ireland and will have minimal impact on affordability.”
On a positive note, the extension of the Help-to-Buy scheme until the end of 2029 is welcomed. The scheme has been instrumental in helping first-time buyers enter the property market and has supported the increased supply of new homes in recent years.
Additionally, funding allocations to the Land Development Agency, Irish Water, and EirGrid will aid in the delivery of key infrastructure, facilitating the development of residential units in the near future. The extension of mortgage interest relief for another year is also a welcome relief for those on tracker mortgages, helping to ease financial pressures exacerbated by recent interest rate hikes.
The introduction of the Residential Zoned Land Tax, which will take effect in February 2025, is designed to curb land hoarding and release landbanks for residential development. Set at 3% of the land's market value, this tax is expected to stabilise land prices, a key component in reducing residential development costs. Landowners can apply for an exemption in 2025 if they are seeking to have the land rezoned to reflect the activity for which it is being used.
Sherry FitzGerald broadly welcomes the cost-of-living measures outlined in Budget 2025. The expansion of income tax brackets and adjustments to the Universal Social Charge will provide households with significant savings. Positive steps such as increased funding for childcare services and the extension of the reduced VAT rate on electricity and gas are also noteworthy inclusions.
In conclusion, while Budget 2025 contains several positive measures to improve housing delivery, it misses critical opportunities to resolve the supply shortage that lies at the heart of the housing market emergency.
For any further information, please contact:
Jill O’Neill
PR Director
Sherry FitzGerald Group
Ph. 01 237 6500 / 086 252 3277
Marian Finnegan
Managing Director
Sherry FitzGerald Residential & Advisory
Ph: 086 814 8251
