The VAT rate on construction services should be reduced temporarily to 9 per cent from 13.5 per cent, the Construction Industry Federation (CIF) says in its pre-budget submission.

This short-term stimulus measure would help to create employment and encourage private investment, it says, pointing out that a similar system exists for the tourism sector. This is one of a number of suggestions in the lobby group’s submission to Government.

It also calls on the Government to impose mandatory lending targets on banks for new mortgage lending and calls for a review of the residential mortgage approval process, in order to reduce the number of instances in which loan approval is withdrawn at closure stage in the sale process. The CIF has also called for the suspension of part V social and affordable housing obligations, which oblige developers to ringfence up to 20 per cent of the land in any one development for social housing.

The measures could have a major impact on the construction sector, said Tom Parlon, the CIF’s director general.