Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

As I outlined in detail on Committee Stage, the help-to-buy incentive is an important element of Government policy on housing. It is one part of the many actions to develop a fully functioning housing market that responds adequately to the needs of our citizens included in Rebuilding Ireland - Action Plan for Housing and Homelessness, which was launched last July. It is in this context that the help-to-buy scheme should be considered. Its role would be to complement the other measures in the action plan. The extent to which the market responds will very much depend on the speed and efficiency with which structural supply constraints are eliminated and residential building activity increases. Considering the importance of the scheme, however, I agree it would be prudent to undertake an additional analysis to examine aspects of the scheme, including those raised by the Deputies on Committee Stage. That was why, during that debate, I committed to commission an independent impact assessment of the help-to-buy incentive with a view to examining its general impact.

This report will be completed by September 2017, in time for next year's budget. It will involve a general assessment of the entire scheme, including of issues the Deputy has raised, to ensure that the incentive can achieve the socio-economic objectives at which it is targeted. It could be argued that by accepting this amendment and enshrining specific methods of analysis of the scheme into legislation, the potential scope of the proposed review could be narrowed. At the moment, the scope of the proposed review remains quite broad, as befits such a wide-ranging incentive. Therefore, I cannot accept this amendment but I hope that the Deputy will accept my previous commitment to commission this independent impact assessment.

A number of other items were raised, principally by Deputy Stephen Donnelly. As I explained on Committee Stage, the amendment he tabled was unworkable in practice. It was not targeted in a way that would be efficient and it left open the possibility of its being used for tax avoidance purposes. I could not come up with a construct that targeted efficiently people in negative equity who are renting out a small apartment and renting larger accommodation for themselves. I am open to advice, however, on how such amendments could be constructed or on how such a measure could be included in tax law in the future. Thus far, however, the approach that has been taken was to work with and take the advice of the Central Bank. As rightly mentioned, the Central Bank has modified its prudential rules in respect of persons in negative equity to make it easier for them to raise a loan. It is true that some banks may vary the prudential rules on a case-by-case basis. Recent data published by the Central Bank indicate that negative equity mortgage loans amounted to €121 million, or 660 loans, from the introduction of the micro-prudential rules until the end of quarter two of this year. The modifications made by the Central Bank are working to the extent of €120 million worth of mortgages to help persons in negative equity to move out of it. I am open to other suggestions. As I stated, I have not come up with anything to meet the need identified by the Deputy.

A number of other items were raised in the discussion. Many are matters for the Minister responsible for housing. I am dealing only with the tax side. The help-to-buy scheme is a targeted scheme for first-time buyers of new homes. It is quite limited. I expect that it will work efficiently for the particular category for which it is designed. I am not advancing it as some kind of overall cure for the housing crisis, of which we are all aware. We know it is multifaceted in its causes and effects. The plans published by the Minister for Housing, Planning, Community and Local Government in the summer comprise a range of initiatives to deal with the problem. I am sure the Deputies opposite are aware of the scope of the proposals. This is one specific tax proposal targeted at helping first-time buyers of new homes to put a deposit together to enable them to get a mortgage. I hope the announcements by the Governor in the afternoon will reinforce this. This is not connected to the help-to-buy scheme but I hope the modifications to the prudential rules will be of further assistance to persons who want to acquire a home.

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