Reaction to Budget 2020October 8, 2019
Reaction to Budget 2020
Marian Finnegan, Sherry FitzGerald Group
Tuesday, October 08, 2019
Sherry FitzGerald cautiously welcomed some of the measures introduced in Budget 2020, specifically the retention of the Help to Buy scheme for a further two-year period. However, according to Marian Finnegan; “Despite the severity of the housing crisis, Budget 2020 was relatively benign from a property perspective and disappointingly it failed to address key issues relating to the residential rental crisis.”
“The Government’s endorsement of the success of the Help to Buy is positive news, however an extension for a longer period such as five years would have provided much more certainty for suppliers of new homes. Furthermore, despite the significant challenges in the rental market the Government have once again failed to address the continued outflow of private investors from the buy to let market.”
An analysis of Sherry FitzGerald sales nationwide reveals that two private landlords are exiting for every single new landlord entering the rental market. This exodus of private investors is further evidenced in the loss of over 12,000 private rental properties in the past two years, as reported by the RTB. This trend continues to deepen the supply side crisis in the lettings market, and it is disappointing that this has not been addressed in today’s Budget measures.
On a positive note, Minister Donohoe announced the Government’s intention to increase the capital expenditure on social housing, which is to be welcomed. He announced the allocation of €1.1 billion for the delivery of 11,000 social homes in 2020. These are proposed to be delivered through a combination of construction, acquisition and leasing.
The Minister also allocated an extra €80 million for the Housing Assistance Payment (HAP) in 2020 to provide an additional 15,750 new tenancies in 2020.
Commenting on these measures, Ms. Finnegan said; “The announcements in relation to social housing are positive and a step in the right direction to increase stock levels in this vital sector. However, the Government measures in relation to the private rental sector are disappointing. Thousands of private landlords are leaving the market each year due to increased costs and regulation. The initiatives announced today will provide some certainty for first time buyers but unfortunately not for those renting.”