Fine Gael is proposing to cut the amount of VAT paid on new homes and introduce a "Help to Buy" scheme as part of efforts to tackle the housing crisis.

It will today resume its negotiations with Independents and smaller parties as it attempts to form a minority coalition.

Housing is one of the biggest issues in talks on the formation of the next government.

A housing paper to be tabled by Fine Gael proposes a range of measures such as temporarily reducing VAT on new homes and apartments from 13.5 per cent to 9 per cent.

The move has been consistently advocated by the Construction Industry Federation. The proposal to cut VAT will be pitched as a key element in "cutting costs and increasing the viability of house building".

A new “Help to Build” funding scheme for the development of affordable homes is also proposed to help builders access finance.

Excessive rates

Fine Gael’s document acknowledges difficulties faced by first-time buyers in getting a mortgage have increased pressure on the rental market and may be hindering house building.

It proposes to work with the Central Bank, as part of its review of mortgage lending limits, to develop a "Help to Buy" scheme to help first-time buyers get mortgages.

The Central Bank and Competition and Consumer Protection Commission would be instructed to set out a number of options to tackle the high cost of standard variable rate mortgages.

The paper says it is “not ethically acceptable for Irish banks to charge excessive interest rates”.

All the options in the document would be included in an action plan for housing, to be outlined by a senior minister for housing, within eight weeks of a new government taking office.

On homelessness, 500 “rapid delivery housing units” would be provided as emergency accommodation under Fine Gael’s proposals.

Strong view

A protocol whereby those in receipt of rent supplement, but who face losing their home, can receive additional payment above their rental limit would be expanded. A “housing-focused strategy to end involuntary long-term homelessness” would be implemented.

Councils would be given more power, responsibility and access to finance to build social housing. A new scheme to help those in mortgage arrears to access financial and legal advice is also proposed.

Planning rules would also be changed to promote higher density housing in urban areas.

Meanwhile, Fianna Fáil leader Micheál Martin has said he cannot rule out another election but he will be "responsible" and work hard to prevent one.

“We are getting a very strong view from people on the ground that they don’t want an election so we will work very hard to avoid that, obviously, and we will be responsible in that regard.”

Speaking at an Easter Rising commemoration in Cork, Mr Martin said he was still working to form a Fianna Fáil-led minority government. These are the first public comments Mr Martin has made outside the Dáil chamber on the issue in over two weeks.

He met acting Taoiseach Enda Kenny during the weekend’s commemorations but said the pair had “only exchanged pleasantries”.