Written answers

Thursday, 10 November 2016

Department of Finance

Help-To-Buy Scheme Administration

Photo of John CurranJohn Curran (Dublin Mid West, Fianna Fail)
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24. To ask the Minister for Finance if he will reconsider his decision not to allow second-hand houses to be included in the help-to-buy scheme; if he will reduce the upper property value to €400,000; and if he will make a statement on the matter. [34035/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Help to Buy scheme is being introduced as one of the many actions to develop a fully functioning housing market that responds adequately to the needs of our citizens set out in 'Rebuilding Ireland - The Action Plan for Housing and Homelessness' which was launched last July.

One of the primary policy aims of the Help to Buy scheme is to help increase the supply of housing, by increasing first-time buyers' capacity to meet the requirements of the Central Bank's macro-prudential rules and thus placing more individuals in the position of being able to afford a new home. It is hoped that turning notional demand into real demand will generate the supply response by the market. With the assistance of the scheme, many first-time buyers who want to buy new starter homes would be in a better position to secure deposits and obtain approval for mortgages. In turn, this would mean that developers who may have been struggling to raise funding to build properties will be in a position to point to this increased real demand in their own negotiations with lenders, and therefore be in a position to build more new homes.

Extending the scheme to apply to second hand properties would have no impact on increasing the supply of new homes being built and thus could not contribute to increased supply. As a result, I will not reconsider allowing second hand properties to fall within the scope of the rebate.

In addition, when devising the scheme I was conscious that if a cap on the maximum house price was set at too low a level, then the scheme would be limited in terms of the cohort that it may be able to assist.  Setting this cap at too low a level could also lead to individuals falsifying their property prices in order to qualify. Thus, I decided that I would set a higher cap so that first time buyers struggling with high property prices, especially those in Dublin where prices are highest, would not be excluded entirely from the scheme.

I brought forward an amendment to the proposed cap at Committee Stage yesterday. This reduces the valuation at which properties are no longer eligible for the scheme from €600,000 to €500,000. I have no plans to reduce this cap any further. The maximum rebate of income tax paid available under the scheme remains capped at 5 per cent of the price of the house up to €400,000, or a maximum available rebate of €20,000 per property.

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