Jack Chambers (Dublin West, Fianna Fail) | Oireachtas source

I thank Senator Gavan for raising this matter.

As Senators will be aware, the credit was first introduced in the Finance Act 2022 at a value of €500 for single people and €1,000 for jointly assessed married couples. It has played a valuable role in providing financial support to renters right across the country. The credit was subsequently increased in 2023 by €250 to €750 for a single person or by €500 to €1,500 for a jointly assessed couple.

As announced in budget 2025, the rent tax credit is now being increased again to €1,000 per person or €2,000 in the case of a jointly assessed couple for 2025. In addition, in recognition of the cost-of-living pressures facing many renters right now, I have also increased the credit again for 2024 to €1,000 and €2,000 for a jointly assessed couple.

On the specific recommendation that broadly relates to rent caps, as Senators will be aware, we have introduced rent pressure zones which cannot exceed general inflation, as recorded by the Harmonised Index of the Consumer Price. We have seen research published research on rent pressure zones across the economy. We are committed, as a Government, to focussing on the Housing for All strategy, driving additional supply in the economy, and to moderate the housing costs in both the purchase and rental sectors. In that regard, more than 2,100 new cost-rental homes have been delivered through various different channels, including local authority delivery, approved housing body delivery, the LDA and through the cost rental tenant in situ scheme.

Next year, approved housing bodies will deliver over 1,000 cost-rental schemes. These homes will be delivered with the support of €300 million provided under the cost rental equity loan mechanism and via funding from the Housing Finance Agency.

Recommendation No. 3 seeks a report on mortgage interest relief. Senators Gavan and Warfield, in their recommendation, propose that those with a mortgage balance on their principal private residence of under €80,000 should qualify for the relief. It is also proposed that the relief would be applied at source.

The Government is acutely conscious of the continued impact of high interest rates and mortgage costs on taxpayers. It is for this reason that as part of budget 2025, I announced a one-year extension of the mortgage interest tax relief.

For 2024, the relief at the standard rate of income tax will apply in respect of the increase in interest paid in 2024 over interest paid in 2022. All other conditions pertaining to the relief remain unchanged.

The relief will be capped at €1,250 per property. It will be available to taxpayers in respect of their principal private residence in the State, where the outstanding mortgage balance was between €80,000 and €500,000 as of 31 December 2022. Furthermore, the taxpayer must be compliant with LPT requirements and must have an income tax liability for 2024. The relief will operate by way of a credit offset against a taxpayer’s income tax liability for 2024. Finally, we have set out our wider policy on mortgage interest relief.

Recommendation No. 4 concerns the interaction of the help-to-buy scheme and the local authority affordable purchase scheme. I am pleased to advise Senators that the help-to-buy scheme can operate in tandem with both the local authority affordable purchase scheme and the first home scheme. This scheme makes local authority-provided homes available at a reduced price for first-time buyers and fresh start applicants, whose combined mortgage and deposit will not cover the market price of the newly built home. Under the scheme, the local authority facilitates the sale of a new home to an eligible purchaser for a price that is less than the full market price of a home, in exchange for an equity stake of between 5% and 40%.

The Finance Act 2023 amended the help-to-buy scheme to treat the equity stake as a qualifying loan for the purposes of the help-to-buy scheme. This means that local authority affordable purchase claimants can also avail of help-to-buy scheme as if they were purchasing a home without this assistance.

Under the first home scheme, a special purpose vehicle jointly funded by the State and participating mortgage lenders, offers equity finance to first-time purchasers, including fresh start applicants, of new builds. The first home scheme already has a built-in mechanism that allows it to work in tandem with the help-to-buy scheme by reducing the equity stake available to purchasers to 20% in cases where help-to-buy is claimed. The maximum equity stake available under this scheme is 30%. Where the purchaser is availing of help-to-buy then the maximum equity stake terms of the scheme is 20%.

By way of clarification, section 7 amends the help-to-buy scheme by changing the definition of “qualifying residence” to ensure that a newly constructed property purchased by a local authority, for onward sale to an affordable purchaser under this scheme, is eligible for help-to-buy. This is a technical amendment requested by the Department of Housing, Local Government and Heritage, which may only be relevant in a small minority of LAAP purchases, if at all. It is intended to address circumstances where there may be a delay in completing the purchase directly from the developer.

Finally, recommendation No. 32 seeks a report on the removal of stamp duty on the purchase of residential property for first-time buyers on properties up to a value of €450,000, to be provided within three months of the passing of this Bill. Generally speaking, stamp duty on individual residential property applies at rates of 1% on the first €1 million and 2% on the excess over €1 million, with a further rate now introduced by financial resolution on budget night applying at 6% where the consideration exceeds €1.5 million.

Up to November 2007, when stamp duty of up to 9% applied at staggered rates dependent on the value of the acquired property, first-time buyers were exempted from stamp duty. However, a decision was taken at that time, as part of a restructuring and simplification of stamp duty, whereby the number of rates applying on property acquisitions were significantly reduced. The exemption for first-time buyers was ended at that time. The same stamp duty rates have since applied to both first-time buyers and those acquiring their second or subsequent residential property.A further simplification of the stamp duty system was introduced in December 2010, resulting in the current streamlined structure I have just outlined. While there is no longer a stamp duty exemption for first-time buyers, a range of schemes have been introduced by successive governments designed to assist in the acquisition of a first home, including the help-to-buy and first home schemes and other additional supports. Given the continued success of these measures and that stamp duty on residential property is set progressively according to the consideration involved, I have no plans to provide an exemption at this time. For the reasons outlined, I cannot accept recommendations Nos. 2, 3, 4 and 32.