A Fine Gael MEP has said the rate of VAT for building houses should be reduced.

Brian Hayes says VAT for residential construction should be lowered to 9% – the current rate for the sector is 13.5%.

The European Union is proposing that EU countries should be allowed greater flexibility in setting their own VAT rates in certain areas of the economy.

Brian Hayes has said a change in VAT in construction could encourage more homes to be built: “what the EU commission have now said from last week is they are prepared to have more flexibility

“So that there can be more rates of VAT in areas of construction or retail, to allow countries provoke more demand in their economy where there is a particular supply problem.

“My argument is we should now consider reducing VAT for new homes.”