Michael Noonan (Limerick City, Fine Gael)
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I will run the Deputy's amendment by the relevant Minister and report to him on Report Stage.

The Deputy has put forward several amendments to the help to buy scheme provision, which would fundamentally change the purpose and focus of the scheme. The amendments would mean that the tax relief would only become available when a mortgage was drawn down or in the case of a self-build, when the last tranche of the relevant mortgage is drawn down. They would basically have the effect of altering the timing at which the rebate would be paid. This issue was raised by the Deputy in his contribution to the Second Stage debate.

The principal aim of the help to buy scheme is to help first-time buyers with obtaining the deposit required under the Central Bank’s macroprudential rules and if these amendments were to be accepted, they would change the whole purpose of the scheme. It would no longer be of any assistance to individuals in obtaining a mortgage but would instead provide a tax rebate after a mortgage has been sourced, drawn down and the home purchase, or self-build, was effectively completed.

If I were to accept these amendments, the scheme would not help those struggling to meet the deposit requirements of the macroprudential rules and thus might never be in a position to draw down a resulting mortgage. Consequently, these changes would do little to help individuals obtain a mortgage, especially where they are renting and finding it difficult to save the required deposit. It would also focus the relief entirely on those who are already in a position to obtain a mortgage and are therefore not in need of the assistance of the Exchequer.

The changes proposed would also result in the scheme bringing in a large amount of deadweight and retrospectivity, by providing relief to those who were in a position to put down a deposit before 19 July, as well as to those who have been building a house, possibly for several years, long before the help to buy scheme was considered.

The amended scheme therefore would not have the desired supply effect, as it would no longer have the result which was noted by the Central Bank, namely, that developers who had been struggling to raise funds to build houses would be better able to do so, as many first-time buyers who want to buy new starter homes would be in a better position to place deposits and obtain approval for mortgages. It should be highlighted that several banks currently offer cash back, which consists of a percentage of the mortgage which is received when a mortgage is drawn down. If these changes were accepted, they would effectively provide a rebate from two sources at that time, while still providing no support for individuals to obtain a deposit in the first place. For all these reasons I cannot accept the amendments proposed.