Written answers

Thursday, 4 May 2006

Department of Environment, Heritage and Local Government

Housing Grants

5:00 pm

Photo of Brian O'SheaBrian O'Shea (Waterford, Labour)
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Question 89: To ask the Minister for the Environment, Heritage and Local Government if he intends to restore the first-time buyer's grant in view of reports that many developers are passing on the cost of local authority development levies directly to house buyers thus inflating the cost of new homes; and if he will make a statement on the matter. [16481/06]

Photo of Noel AhernNoel Ahern (Dublin North West, Fianna Fail)
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The new house grant scheme was terminated in 2003 to concentrate housing programmes on areas of greatest impact and social need. It is not proposed to reintroduce the grant. However, through overall increases in supply, and increasing output under various affordable housing initiatives, the Government are seeking to improve access to home ownership for first time buyers. These targeted measures, in particular, assist low income purchasers. This is a better means of improving the affordability of house purchase and using available resources effectively, than a general first-time buyer grant which would over time become absorbed into the house price. Other general measures are in place through the tax system to assist first-time buyers, such as stamp duty concessions and mortgage interest relief.

Development contributions attached as a condition of planning permissions provide a mechanism by which developers can contribute to the cost of providing public infrastructure and facilities that benefit development in the area. They are paid by the person carrying out the development in advance of construction starting.

House prices are not determined solely by the cost of building, but by the interaction of supply and demand in the market. The revised system of levying development contributions under the Planning and Development Act 2000 has not affected the level of supply, as is demonstrated by the fact that housing output reached a new record level of almost 81,000 in 2005. This very large increase in housing output has helped to restrain house price increases in the face of continuing very strong demand pressures and increased mortgage lending.

The Government will continue to prioritise effective action to maintain current high levels of supply in the housing market and in particular, will accelerate measures to assist those who cannot access affordable housing without assistance. A key component of this strategy is ensuring a supply of serviced land for housing which the development contribution system helps to fund. If developers were not required to contribute part of the cost of servicing the land that they use to build houses, servicing new land would become more difficult or an even greater burden would fall on taxpayers.

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