Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 2:

In page 10, between lines 34 and 35, to insert the following:

‘‘Report on economic and distributional impact of the Help to Buy Scheme

8. The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the economic and distributional impact of the Help to Buy Scheme.”.

Amendment No. 2 uses the mechanism the Opposition has to raise issues relating to subject matters of the Bill and that is to seek a report economic and distributional impact of the help to buy scheme within six months of the passing of the Bill and lay it before the Dáil. The help-to-buy scheme is dealt with in section 7, a section to which Sinn Féin is opposed. The help-to-buy scheme has been around for quite a while but the Government in its wisdom - or maybe lack of wisdom - has decided to turboboost it. One would really have to question its thinking on this. Covid-19 has caused significant challenges for the construction sector, which was closed in its entirety for a period of time due to the restrictions and is now operating under restrictions that do not allow as much capacity and output to take place and rightly so because we need to keep our community and people safe. However, this will mean less output. The demand is still there, as we know, and indeed is increasing. There is a significant amount of pent-up demand. Supply will probably be severely curtailed this year and for the best part of next year but the Government has decided to turbocharge the help-to-buy scheme by increasing the amount of money available to people to purchase homes by increasing it from 20% to 30%.

It will do that over the next year as it had done under the July stimulus. The problem in the area of housing, as we have said over and over, is not demand but supply. We need to rapidly increase housing supply and it needs to be affordable. A core belief of Sinn Féin is that we need to suppress rather than increase house prices. A big decision will be taken later today by Dublin City Council on what it will do with State land, what is affordable and so on. The proposal is to provide, on a statutory basis, for an increase in the amount available under the help-to-buy scheme to €30,000. This scheme was to conclude at the end of the year but the Government will now extend it for a further year. The Minister does not need to take my word on this; others have spoken. The Parliamentary Budget Office, PBO, does great work in support of members of this committee preparing for the Finance Bill. It describes the policy impact of this section. I will read from its analysis of the help-to-buy scheme in full so that I cannot be accused of being selective.

An analysis by the PBO in 2019 found evidence of sizeable dead-weight in relation to the HTB scheme, and suggested that the scheme did not fulfil its original aims in an efficient manner. Specifically, some households who had claims approved for the HTB scheme, already had deposits of at least 10% accumulated.

This analysis also found that 21% of claims under the HTB scheme were for properties valued at over €375,000. This suggests that those benefiting from the scheme were households at the higher-end of the income distribution. Considering these findings, the decision to enhance and extend the scheme in this way, is questionable.

If the Minister does not want to take the word of the Parliamentary Budget Office, which has its views, the ESRI has also commented on the scheme. Dr. Barra Roantree noted that research has shown that 40% of first-time buyers making a claim under the scheme had a deposit of at least 20% before applying. Let us consider that. During this time of great constraint - we all know the challenges - the Minister is asking us to approve a Government plan to provide €30,000 to people to purchase their house, 40% of whom do not need the money. I am not saying that; the ESRI is saying it. In fact, it is not even the ESRI saying it because the Central Bank provided the statistics. Many people have a deposit of at least 20% - some have more - before applying. They have a mortgage but the Government in its wisdom has decided to give them €30,000 of taxpayers' money. That would be fine. Who would not want €30,000 of taxpayers' money when building or buying their first home? Everyone would want it and anyone who has got it will be delighted. However, in a time of lack of supply and increased demand, this pushes up house prices. We have seen examples of that in a number of counties as soon as the Government announced this increase back in July. In some estates, house prices went up by €10,000 overnight. I am sure the Minister will accuse me of arguing that he favours developers and vulture funds and is taxing the poor people who have lost their jobs. Again, let us look at what Dr. Roantree from the ESRI said. He stated this measure would push up demand for housing at a time when output was falling back due to the pandemic. The scheme applies only to new houses. He told an ESRI conference on the impact of budget 2021 that the scheme was "likely to fuel property price growth" and would, therefore, "push up prices."

Already, 8,000 claimants for the scheme have not needed this support. That amounts to €24 million. Everyone here will know of community groups or may be involved in organisations that are supporting children and families with disabilities or areas that really need support, particularly during the Covid-19 pandemic.

Not only is the Minister ignoring the ESRI, saying that 40% of the claimants of this did not need the €20,000, but he is saying forget about all that, forget that there is less supply than ever and more demand than ever and let us throw some fuel on the fire. Let us give them an extra €10,000 to bring it to €30,000. What will that do? It will push up property prices. Who benefits from that? It is not the person who is taking out a 30-year mortgage with a bank. There is only one benefiter as the Minister and I both know. The person who benefits is the developer. The Minister may not like to hear it, but that is the reality.

Section 7 of the Bill is about stuffing money into the pockets of developers because it will push up prices. The Minister and I both know it; he should be upfront and say it. He should listen to the ESRI and the Parliamentary Budget Office. He should look at what is happening on the ground. At a time of lack of supply and increased demand, the Minister introduces a measure that will only further increase demand. What happens in that context? Do prices fall? No, they actually rise. That is why there is only one beneficiary of this provision. When house prices increase, people who have mortgages end up paying increasingly more over longer periods of time.

We are completely opposed to this section. The amendment seeks a report, but the reality is that the Minister should not proceed with the section which is flawed. In the words of the Parliamentary Budget Office, it is questionable. In the words of Dr. Roantree of the ESRI, it will push up property prices. In the words of Sinn Féin, it is a section that will only benefit developers.