The Government is considering establishing a new semi-State company to drive house building across the country in an effort to solve the housing crisis.

It is understood senior figures have discussed setting up a new housing corporation that would be able to act as a developer of State-funded homes.

Similar to the model of Irish Water, it would take powers off local authorities and drive a far greater State intervention in the housing market.

It could also be put off the State’s balance sheet and would be able to raise its own capital to fund construction, while also managing increased direct Government funding in the sector.

The consideration of such a semi-State was confirmed by a number of sources, although some were more sceptical than others on whether it would happen.

“We might have to do it if it isn’t being done by the local authorities,” said one Government figure.

It is understood that changes to the scheme of capital gains tax are also being considered for inclusion in the October budget to free up land banks for development.

Tax exemption

In 2012, former minister for finance Michael Noonan granted a capital gains tax exemption for investors who bought property by the end of 2014 and held the property for seven years.

It has recently come in for criticism from, among others, Fianna Fáil housing spokesman Barry Cowen, who has said the exemption was encouraging large-scale foreign investors to hoard land.

Government sources have previously indicated that the controversial Help to Buy scheme of grants for first-time buyers would be abolished by Taoiseach Leo Varadkar and Minister for Housing Eoghan Murphy.

However, there is now understood to be a rethink of this position and sources say it may be kept.

Upon his appointment as Taoiseach at the beginning of June, Mr Varadkar asked Mr Murphy to review the Government’s flagship Rebuilding Ireland policy document, which was launched by Simon Coveney during his tenure in the Department of Housing.

Mr Varadkar said he wanted Mr Murphy to “review Rebuilding Ireland within three months and consider what additional measures may be required including consideration of a greater quantum of social housing build, a vacant home tax and measures to encourage landlords to stay in or enter the rental market”.

Social housing

Senior Government sources have confirmed that a greater level of State funding for social housing will be announced in the coming months.

It is understood a proposal on a housing semi-State body was also considered when Mr Coveney launched his initial plan last year, but was not included in his final strategy.

Like similar agencies in other EU member states, the prospective new semi-State would issue bonds on international markets in order to fund the development of social housing.

At present, the Housing Finance Agency can raise funding but it is distributed through local authorities and voluntary housing bodies.

The announcement of a greater funding allocation could come in the relaunch of Rebuilding Ireland, the budget or in the 10-year capital investment plan to be outlined after the budget.

The capital plan will also tie in with the Government’s spatial plan, called “Ireland 2040”, to direct investment towards areas of the country that will be earmarked for growth.