HAI Responds to Budget 2023

Budget 2023 was announced by Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath as a “Cost of Living Budget”, focused on helping individuals, families, and businesses to deal with rising prices. The total value of the Budget came to €11 billion, reportedly the largest Budget in the history of the state.

Hardware Association Ireland’s (HAI) pre budget submission – Empty Homes – Unlocking the Opportunity – was presented to the relevant Government Departments earlier in the year. It was also forwarded to all Ministers, TDs, and Senators.

Empty Homes- Grants to buy – ✓

Empty Homes– Grants (for current owners) to Refurbish – ?

Vacant Property Tax –  ✓

Vacant Property Tax- administered by Rev Comms – ✓

Reduction of VAT on carbon-saving products- X

Continuation of Help to Buy Scheme – ✓

The Concrete Block Levy- X

TBESS Scheme – ✓

Growth & Sustainability Loan Scheme- ✓

Energy Efficiency Scheme – ✓

Empty Homes:

One of our main proposals was a grant for first time buyers of empty and derelict properties. HAI was pleased to see this announcement in response to its Empty Homes Proposal, and to see the issue of vacant properties responded to by the government. In July this year the Croí Cónaithe Scheme went live with grants of €30k and €50k respectively. This is a very significant step in the right direction.

However, we believe that further can be done to support the refurbishment and reintroduction of older and vacant properties to the market.

Another HAI proposal was to have incentives for owners of Empty Homes to refurbish and/or sell on the property. In brief these incentives were in the form of a tax write off of capital expenditure against future rental income and a moratorium on capital gains tax on these properties. As we go to press it is unclear if the budget has dealt with these proposals. We will press for an answer.

HAI was pleased to see the announcement of a Vacant Homes Tax to combat the challenge of empty properties nationwide. In the Budget Minister O’Donohoe announced the launch of a new Vacant Homes Tax with the intention to increase the supply of homes for rent or purchase to meet demand. This tax will be three times a property’s local property tax, on top of the existing rate. The tax, to be introduced in 2023, will apply to residential properties that are occupied for less than 30 days in a 12-month period. The new tax will be administered by the Revenue Commissioners. There are to be a number of exemptions to ensure owners are not unfairly charged where a property may be vacant for a genuine reason. While HAI believes that the tax is low, it is now on the agenda and more importantly the acceptance of our proposal that it becomes the responsibility of the Revenue Commissioners is much to be welcomed.

HAI was disappointed with the lack of provisions announced for the refurbishment of properties to improve their energy rating, such as the reduction of VAT on carbon-saving products such as heat pumps and insulation. This is disappointing especially as the EU has said that each member state can apply their own vat rates.

New Housing:

With regards to the provision of housing, Minister O’Donohoe announced the following figures:

• some 25,000 new homes were built in the last 12 months
• a further 44,000 have been granted planning permission

€1.7 billion will be allocated to the Department of Housing in 2023, the Minister for Public Expenditure said would deliver the social housing new build target of over 9,000 homes.

“I am announcing a €99 million increase in funding for existing schemes, including the Social Housing Current Expenditure Programme which will support nearly 6,500 additional new social housing units, through Approved Housing Bodies new build delivery and leases,” Michael McGrath said.

€215 million will be allocated in 2023 to three affordable housing schemes; the Local Authority affordable purchase scheme, the AHB Cost rental scheme and the national First Home Shared Equity scheme.

Additionally, it was announced by the Minister for Finance that the Help to Buy Scheme, which since its inception in 2017 has benefitted over 35,000 people, will continue in its current rates until the end of 2024. HAI welcomes this but has noted its lack of uptake in counties outside of Dublin, Meath, Kildare and Cork (Source: Revenue – Help to Buy Annual Report 2021) and is hopeful that the announcement of its extension will be followed by heavier campaigning to raise awareness and engagement nationwide.

HAI will continue to liaise with the Department of Housing, Planning and Local Government to continue to push for further provisions to combat the housing challenge.

The Concrete Block Levy

This appears to have come out of thin air. Our belief is that it is highly unfair. If implemented it would add to the costs of building and undermine much of the good work done on affordability. In particular it will discriminate against younger people hoping to buy a home.

HAI have made a request to the Minister for Housing to impress upon The Department of Finance the need to look at an alternative.

Business Support:

Additionally, HAI was pleased to see the announcement of the introduction of a €1.25 billion Temporary Business Energy Support Scheme (TBESS), providing qualifying businesses with up to 40% of the increase in electricity or gas bills up to €10,000 per month. It will help small businesses most, but also medium and larger businesses. It will be administered by the Revenue Commissioners, backdated to September, and will run until at least February 2023.

Additionally, a €200 million targeted Ukraine Enterprise Crisis Scheme was announced to assist viable but vulnerable businesses in the manufacturing and internationally traded services sectors which are suffering the broader effects of the war in Ukraine as well as increasing energy costs, and a €1.2 billion State-backed Ukraine Credit Guarantee Scheme, to provide low-cost working capital to SMEs, primary producers and small mid-caps (businesses with fewer than 500 employees) of up to €1 million.

This is in addition to the new Growth & Sustainability Loan Scheme, which it was said will make up to €500 million in low-cost investment loans of up to 10 years available to SMEs, with no collateral required for loans up to €500,000. A minimum of 30% of the lending volume will be targeted towards Environmental Sustainability purposes.

An additional €4 million in funding was also announced to the Local Enterprise Office network to include a new grant for micro-enterprises for energy efficiency. The Small Firms Investment in Energy Efficiency Scheme will provide a grant to companies to encourage capital investment in projects to reduce carbon emissions.

HAI will monitor the impact of Budget 2023 on our members and will continue to liaise with our members and with the Government in the coming months.