Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

The scheme was introduced in 2017 with the purpose of assisting first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. The relief is only available in respect of new builds, with a view to increasing the supply of new housing and stimulating demand. To date, the scheme has been a significant support for first-time buyers of new homes. As of 1 November 2023, some 42,885 first-time buyers, either singly or as part of a couple, had benefited from the scheme.

As the Deputy will be aware, the Finance Bill will extend the help-to-buy scheme for a further year to the end of 2025. The scheme is also being amended to enhance its interaction with the local authority affordable purchase scheme.

This amendment will enable the use of the affordable dwelling contribution received through the affordable purchase scheme for the purpose of calculating the 70% loan-to-value requirement, thereby facilitating access for a greater number of affordable purchase scheme purchasers to the help-to-buy scheme.

The Deputy has previously raised concerns regarding the potential for the scheme to exacerbate housing prices. As has previously been stated, policymakers were aware at the time the scheme was being developed that it was not without risk. Likewise, they were aware there was a danger that, against a background of constrained supply, the initiative could serve to increase prices for new homes, thus potentially undermining to some extent the affordability aspiration of the scheme. However, on all occasions when the matter was formally examined to date, concerns in this regard were not borne out by the review data.

Studies carried out by Indecon economic consultants found the main driver of house prices was the mismatch between supply and demand, rather than the existence of the scheme. Similarly, the review by Mazars in 2022 found that there is no definitive evidence that help to buy pushed up the price of new homes. In fact, Mazars found that the prices paid for new homes by people who received help-to-buy relief were slightly lower than new house prices in the economy in general, likely because of the €500,000 price eligibility cap.

There have been significant changes in the market since the Mazars report on the scheme was published. The increase in interest rates in the intervening period means further stability and certainty is needed for first-time buyers who may now face higher mortgage interest rates.

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