Professor Philip Lane:

There was a particular design issue. The initial announced scheme was restricted to cases where the deposit was not greater than 20%.

We have pointed out that many people put down bigger deposits than that. I understand the political undesirability of giving subsidies to cash buyers. Pushing it down to a 70% loan to value was a sensible reform. After that there was the decision to provide a rebate to first-time buyers who buy new homes. The restriction to it applying to new homes is vitally important because it restricts the impact on the demand for existing homes and it may have a positive supply side effect on the construction of new homes. A similar scheme is in place in New Zealand, which, essentially, has a different regime for first-time buyers buying new homes than other categories. That element of the system is a good design.

In the end the matter is up to the political system. If it recognises, among the many calls on the public purse, the situation of people who find it very difficult to raise a deposit for a home and if the decision is to give a rebate to that category of people, that is a political decision. It helps those people to meet our 10% deposit requirement. My assessment is that we need that 10% deposit requirement. If the political system decides to provide a rebate to help households to meet that, that is in the realm of fiscal policy. The Government makes all kinds of fiscal decisions about where to set expenditure and tax breaks. It is for the Oireachtas to decide on whether that is the best use of funding. It is often described as the impact on demand versus supply. That is one set of considerations. The other consideration, which, essentially, is a political consideration for the Oireachtas to decide, is the merits of that group of people receiving a subsidy versus every other use of that set of revenue.