New Value Added Tax rate makes it even more expensive for anyone buying a house.
Last week, the €3,800 grant for first time buyers was scrapped. The latest VAT increase adds another €1,800 to the cost of an average €200,000 home. In total, the average first time buyer will have to pay an extra €5,600 for their new home.
This latest VAT increase is just another in a long line of expenses faced by buyers of new homes and is a double whammy for first-time buyers.
The VAT increase comes in effect in the new year meaning that buyers who have already signed contracts on a new home will have to pay up. Unless the sale of the house is complete by 31 December, the price of a new home goes up by one per cent.
Ciaran Ryan of the Irish Homebuilders Association believes that the government should introduce a transitional arrangement for buyers who signed contracts before budget day. The Irish Homebuilders Association says that it is unlikely that builders will absorb the VAT increase as they already pay 37 per cent of the value of every new house in tax.
An RTÉ News report broadcast on 7 December 2002. The reporter is Eileen Whelan.