Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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9. To ask the Minister for Finance if consideration will be given to extending the help-to-buy incentive until 31 December 2022. [44723/21]

Catherine Connolly (Galway West, Independent)
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13. To ask the Minister for Finance his plans to phase out the help-to-buy scheme; and if he will make a statement on the matter. [44834/21]

Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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Can the Minister outline his views on the rent-to-buy scheme? Obviously, it is something that should be coming to an end in December 2021. It is a matter the Minister will be considering in the upcoming budget and I wondered if he would make a statement on the matter.

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 9 and 13 together.

This is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of income tax and deposit interest retention tax, DIRT, paid in the State over the previous four years, subject to certain limits.

The scheme was enhanced in 2020 as part of the July stimulus and, in the Finance Act 2020, the enhanced arrangements were extended until the end of this year. Following a commitment in the Housing for All strategy, my Department carried out a review of the scheme as part of its tax strategy group deliberations. The resultant paper was published last week and is available on the Government website.

In the coming weeks, in the run up to the budget, I will be taking stock of where matters stand and taking decisions regarding the help-to-buy scheme having regard to a number of elements, including the overall policy context in which the scheme operates and my Department's deliberations as set out in the recent tax strategy group paper.

Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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My experience, from meeting with constituents, is it has been a useful and helpful scheme, particularly to young people trying to get on the property ladder. The Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, has, within his Housing for All, a suite of measures, but this is one particular one I would advocate should continue.

The Minister will be aware that many of the housing authorities or housing bodies have called for consideration of an extension of the help-to-buy scheme not only to cover new properties or properties that are to become first-time homes, but also second-hand homes. The pandemic has had implications for construction. I suppose the fear is that it will also exacerbate the concern around the cost of building and, ultimately, be passed on to the buyer.

To reiterate the point, if it was at all possible, there is plenty of evidence to show it was a scheme that worked. It is a scheme that we should consider for the future, and also perhaps widening the breadth of it.

Catherine Connolly (Galway West, Independent)
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I come to this from a different perspective.

I have had the opportunity to read the review of the help-to-buy scheme. I note from the review that the scheme has cost more than four times what was anticipated. This year alone, it will cost €177 million. It was introduced as a temporary scheme. It was announced in 2016, it came into operation in 2017 and as the Minister said, was enhanced later. It was always envisaged to be temporary.

When I look at the review of the help-to-buy scheme - the Minister talks about the options - there were five options mentioned in it. One of them, that would apply to derelict property, was not given much priority, which I am pleased to agree with. The group talked about ending the scheme this year, keeping it for another two years, keeping it the way it was before the Minister enhanced it or else tapering it out. The Minister also points out that there has been no formal review in over three years. The Minister might comment on some of that.

Paschal Donohoe (Dublin Central, Fine Gael)
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If I may begin with Deputy Connolly, the value of the tax strategy group paper is it lays out different options that the Government can consider in the run-up to the budget.

At this point, I cannot indicate the future of the scheme because the Government has not made a decision on it. It will be made on budget day.

I note what the tax strategy group papers stated about the need for a more fundamental review of the scheme because it has been enhanced. It is now costing more than it has been in recent years. That is because more home buyers are using it and more homes have been built.

I am aware, in answer to Deputy Niamh Smyth, of the value of the scheme and the constituents who were raising this issue with her. I believe this scheme has played a valuable role in allowing and encouraging more homes to be built. I will weigh up all these views in the run-up to the budget.

Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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The Minister stated he will consider that in terms of the upcoming budget. To reiterate the point, my experience has been from speaking with first-time buyers and young couples trying to get on the property ladder and own their own home. This has been very helpful.

In terms of the vacant buildings and second-hand buildings, it is something that perhaps could be considered by Government in the upcoming budget.

Catherine Connolly (Galway West, Independent)
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I am concerned with the Minister's answer in the sense that I would like it confirmed that there will be a formal review of this scheme. A formal review has not been carried out in three years and if the Minister is to extend the scheme, I would it confirmed that there would be one.

It has been pointed out by the ESRI and Social Justice Ireland that the scheme has contributed to house prices. It has also been pointed out that 40% of the first-time buyers making a claim already had a deposit.

What is even more interesting now is that the Minister stated that more people are using it and that is why it is four times more costly. This is not accurate, when one looks at the paper, for example, taking 2020 and 2019. There were 6,713 applicants in 2019 and the scheme cost €102 million. The following year, there were fewer applicants than in 2020 and it cost more. I ask the Minister to explain that to me now. That is only one example, where there are fewer applicants, 6,227, and it is costing more. In addition, it cost more than four times the original estimate for what was a temporary measure. As has been pointed out in the policy document, there is now a change in policy and there are many other schemes to help first-time buyers. It needs a serious reconsideration.

Paschal Donohoe (Dublin Central, Fine Gael)
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The reason fewer purchases happened is because of how long the economy was locked down in 2020. There were fewer opportunities for homes to be bought than there would have been in the previous year.

Catherine Connolly (Galway West, Independent)
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It cost more.

Paschal Donohoe (Dublin Central, Fine Gael)
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The reason the cost went up is because in the middle of the year we enhanced the scheme. That is the reason.

As to the point Deputy Smyth made, as I stated a moment ago, I am well aware of the importance of the scheme.

If Deputy Connolly is concerned about the answer I gave, she would even be more concerned if I indicated a budget day decision three weeks before the budget. All of these matters will be dealt with on that day.