Pearse Doherty (Donegal, Sinn Fein)
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43. To ask the Minister for Finance the estimated cost in 2017 and other years of the help-to-buy scheme based on the latest figures; and the reason no cost containment measures were put in place for the scheme. [16432/17]

Pearse Doherty (Donegal, Sinn Fein)
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Today the Governor of the Central Bank appeared before the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and the Taoiseach. When asked, he told us in Sinn Féin and those of us who oppose the help-to-buy scheme that, of course, the help-to-buy scheme was pushing up prices and that a cost-benefit analysis would have been a good idea. We now know, despite the Minister's suggestions that it would not happen and despite assurances he claimed he got from the developers that it would not happen, house prices in the past three months have spiralled out of control, rising by €6,000 per month in Dublin and €4,000 per month across the State. Will the Minister now do the right thing and at a minimum suspend the help-to-buy scheme before more damage is done and house prices go out of the reach of many ordinary families?

Michael Noonan (Limerick City, Fine Gael)
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The help-to-buy incentive aims both to assist those first-time buyers struggling to save for the deposit required to purchase a house, and incentivise additional building and the provision of extra housing stock. At budget time, my officials estimated that the help-to-buy incentive would cost €40 million per annum but €50 million in 2017 due to the backdating of the relief in respect of properties which became eligible for the scheme since 19 July 2016.

To avail of the incentive involves two stages. Stage 1 is the application stage, wherein prospective applicants can query whether they qualify for the incentive. They can also get clarity on the maximum amount of rebate they could potentially benefit from, based on their tax paid in a four-year period. Stage 2 is the claims stage, wherein applicants who decide to proceed with purchasing or building a qualifying property must provide documentary evidence of the relevant property transaction or their mortgage drawdown.

The estimates for the potential cost of the incentive that have featured in recent media reports are based on the number of applications received by Revenue to stage 1 of the scheme, rather than the number of claims to date. However, many of these applicants may never make a claim to stage 2 for a variety of reasons. These could include individuals who do not go on to obtain mortgage approval, who may decide to purchase a second-hand property, or who are not able to source the new home that they desire.

As of 31 March 2017, Revenue had received 4,698 applications to stage 1 of the help-to-buy incentive. Of these, 1,006 stage 2 claims have been created to date. A total of 534 of these have been approved, at an estimated cost to the Exchequer to date in the order of €8.2 million of the €50 million allocated for the cost of the incentive in 2017.

With regard to the Deputy's query concerning cost containment measures, the help-to-buy incentive is by its nature a demand-led scheme. Therefore, artificially restricting its potential uptake in such a manner would be detrimental to its policy aims and would be unfair to those potential applicants who could lose out as a result. In addition, should the cost of the incentive exceed the original estimate, it could be indicative of an increase in the supply of new homes, which is exactly what I intended to encourage through its introduction.

Pearse Doherty (Donegal, Sinn Fein)
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Over the past 48 hours since the two reports have been published, households have been asking if we are in some kind of time warp. Are we back in 2007 again when the RTE news and headlines splashed across the newspapers indicate that the price of houses in the capital city is increasing by €6,000 a month? Every analyst and economist worth their salt is attributing part of the blame for that increase on the help-to-buy scheme.

The Minister has repeatedly said that the help-to-buy scheme is about helping people to get their deposit. The Minister, Deputy Coveney, repeated that ad nauseamyesterday. The official figures the Minister provided to me indicate that 73% of the applicants approved so far had way in excess of the 10% regulatory deposit required. Only 27% of them actually drew down a loan to value of 90%. There is no guarantee that the 27% needed the help-to-buy incentive to make up the deposit. They may have just decided to go for a 90% loan to value to use money from a mortgage for other purposes as well.

Pat Gallagher (Donegal, Fianna Fail)
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I call the Minister.

Pearse Doherty (Donegal, Sinn Fein)
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I ask the Minister to acknowledge that this is not a targeted incentive. His scheme is about handing out free money - everybody loves free money.

Pat Gallagher (Donegal, Fianna Fail)
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Deputy, go raibh maith agat.

Pearse Doherty (Donegal, Sinn Fein)
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We need to remember he is taking that money from the elderly person who is lying on a trolley this morning, from the child who cannot get speech and language therapy this morning-----

Pat Gallagher (Donegal, Fianna Fail)
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Go raibh maith agat, a Theachta.

Pearse Doherty (Donegal, Sinn Fein)
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----- or from the creaking infrastructure in rural areas. Does the Minister acknowledge that the spiralling house prices we have seen in the first three months of 10% and 9% across the State-----

Pat Gallagher (Donegal, Fianna Fail)
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I call the Minister.

Pearse Doherty (Donegal, Sinn Fein)
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----- is partly as a result of his flawed help-to-buy scheme?

Michael Noonan (Limerick City, Fine Gael)
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The various indices about increases in house prices are largely applicable to second-hand houses. The help-to-buy scheme does not impact on the price of second-hand houses at all. In any economic model the generation of extra supply should act as a downward pressure, easing the demand for second-hand houses if people can buy new houses instead. Since the scheme is for people principally buying starter homes, then it is an incentive to put a deposit together. Since the house does not exist until the deposit is put together and built - because it is for new builds - it is impossible to argue that there has been an increase in price on a new build. The increases have happened for other reasons and go across the second-hand market. They relate to what everybody knows here - a general lack of supply being driven by demand.

I read the comments of the Governor of the Central Bank to the committee this morning on one of the websites. Without picking an argument with the Deputy, he is not quoting the Governor in full.

Pat Gallagher (Donegal, Fianna Fail)
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I call Deputy Doherty for his second question, combined with Deputy Burton.

Pearse Doherty (Donegal, Sinn Fein)
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I did not suggest I was quoting him in full. He did suggest that, of course, it was pushing up house prices.

Michael Noonan (Limerick City, Fine Gael)
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However, he said it would wash out over time.

Pat Gallagher (Donegal, Fianna Fail)
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Please Minister, allow Deputy Pearse Doherty to speak.

Pearse Doherty (Donegal, Sinn Fein)
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However, it is pushing up house prices, something the Minister denies.

Michael Noonan (Limerick City, Fine Gael)
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The Deputy did not quote the relevant piece.

Pat Gallagher (Donegal, Fianna Fail)
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Minister-----

Pearse Doherty (Donegal, Sinn Fein)
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The Minister refuses to acknowledge the facts, which he has put on the record of this House. Some 73% of people who have been approved for the help-to-buy scheme did not need this money at all to garner their deposit. That represents millions of euro being provided, as the Minister says, to help people get a deposit.

The Minister also claims this is about house prices in the second-hand market. I suggest to the Minister that he read the bloody report. He should read the commentary that goes along with the report. He should read the second report that came out yesterday, which very clearly states that house price inflation for new builds is running at double what it is for second-hand ones.

The report has made the distinction, so the Minister's argument falls flat on its face but let me put it to the Minister again. When will the alarm bells start to ring in his private office? When will they ring in the Department of Finance? Is it when house prices go up another €6,000 next month and in subsequent months? At what point will the Minister call a halt to a scheme that is about throwing money at a supply-side problem? This is not a demand-side problem and the scheme is only having one effect, which is to push up house prices and put more money into developers' pockets. These are the same developers who asked the Minister for the scheme.

Pat Gallagher (Donegal, Fianna Fail)
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The Deputy has exceeded his time.

Pearse Doherty (Donegal, Sinn Fein)
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These are the same developers the Minister told he was introducing the scheme before he told any Deputy in the House about it on budget day.

Pat Gallagher (Donegal, Fianna Fail)
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I call Deputy Joan Burton for a short supplementary question.

Joan Burton (Dublin West, Labour)
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At the time of the budget, I warned the Minister that this would constitute a direct transfer from Fine Gael to builders and developers. It was designed as such and has had the impact that I forecast at the time of the budget. To be honest, at the time the Minister was aided and abetted by Fianna Fáil. Essentially, the Minister is turbo-charging the housing market on an inadequate scale in the context of many builders and developers still being on strike and sitting on large volumes of land. I can understand that the Minister chose to move on this to induce some kind of feel good factor into the housing market. That is the only sense I could make of the Minister for Housing, Planning, Community and Local Government's strange comments yesterday. It is obvious that one part of his head disagreed with it and the other part, probably in the context of the leadership election, did not want to say anything critical about the serving Minister for Finance.

Pat Gallagher (Donegal, Fianna Fail)
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Ceist, Deputy. Other Deputies have tabled questions.

Joan Burton (Dublin West, Labour)
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I can take the Minister to signboards in my constituency where the cost of houses went up by €20,000 almost immediately after the Minister put this scheme, which he was advised against, into effect. The Minister must take responsibility for it.

Pat Gallagher (Donegal, Fianna Fail)
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I call the Minister for a final response.

Michael Noonan (Limerick City, Fine Gael)
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I am absolutely amazed that the Labour Party and Sinn Féin are objecting to the Government helping young couples to buy their first home. What kind of a society-----

Pearse Doherty (Donegal, Sinn Fein)
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Deal with the facts, Minister. That is the kind of nonsense we heard-----

Pat Gallagher (Donegal, Fianna Fail)
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The Minister, without interruption.

Michael Noonan (Limerick City, Fine Gael)
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What kind of a society will we have if the representatives in the Labour Party and Sinn Féin deliberately come into the House and try to prevent a Government scheme that is working to help young couples to put a deposit together.

Joan Burton (Dublin West, Labour)
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That is a joke. It is unworthy.

Pearse Doherty (Donegal, Sinn Fein)
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It is pushing up houses prices by €18,000 in 12 weeks. The Minister is a disgrace.

Pat Gallagher (Donegal, Fianna Fail)
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Deputies, please.

Pearse Doherty (Donegal, Sinn Fein)
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The Minister would make McCreevy proud.

Pat Gallagher (Donegal, Fianna Fail)
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The Minister, without interruption, or we will move on.

Michael Noonan (Limerick City, Fine Gael)
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The Deputies are shouting me down now.

Pearse Doherty (Donegal, Sinn Fein)
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Deal with the facts.

Pat Gallagher (Donegal, Fianna Fail)
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We will move on.

Michael Noonan (Limerick City, Fine Gael)
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The Deputies are just shouting me down. This time last year there was hardly any starter homes being built in any part of this country-----

Joan Burton (Dublin West, Labour)
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The Government is creating a housing bubble.

Michael Noonan (Limerick City, Fine Gael)
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-----except once-off houses in rural parts of Ireland. There are a lot of starter homes being built now and the young couples I am talking about are being assisted by this scheme. It does not apply to second hand houses or anything other than new builds. It is stimulating new builds.

Joan Burton (Dublin West, Labour)
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It is going directly into the builders' pockets.