Paul Gavan (Sinn Fein) | Oireachtas source

We are opposing this section. Section 7 amends section 477C(5A) of the Taxes Consolidation Act 1997 to extend the enhanced help to buy relief. The help-to-buy scheme provides income tax relief to assist first-time buyers with obtaining the deposit required to purchase or build their first home. The enhanced help-to-buy relief is set to expire on 31 December 2020 and this section provides for an extension of the enhanced relief by 12 months to 31 December 2021. The Government's policy change allows first-time buyers purchasing a newly built home or building one themselves to claim back up to €30,000 in income tax paid, as well deposit interest retention tax, DIRT, on bank deposit interest, over the last four years. As previously, people cannot claim back either universal social charge or PRSI paid over that period. This is a substantial increase on the current rules that allow home purchasers to claim back a maximum of €20,000. It doubles the purchase price the scheme can cover. Under the scheme, people can claim up to 10% of the price on houses priced up to €300,000, or €30,000 on more expensive properties up to a maximum value of €500,000.

Covid-19 has severely stunted house building, reducing the number of new builds available to those using the help-to-buy scheme. There is no guarantee that the extra €10,000 will make homes more affordable and there are reasons to believe it will push up prices. Indeed, speaking at an ESRI conference on budget 2021 on 16 October, Dr. Barra Roantree said:

It is likely to fuel property price growth. So, it will push up prices

When the hospitality sector sought a dramatic VAT cut in the stimulus plan, it was quite transparent that it did not intend to pass that on to customers but wanted to allow businesses to recover margins. With current supply constraints, the expanded help-to-buy scheme will likely deliver precisely that outcome for developers. There is also a distributional and equity issue regarding the policy change. The most recent data show that 40% of those who availed of the help-to-buy scheme already had the required deposit to secure a mortgage.