Michael McGrath (Cork South Central, Fianna Fail)
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The Help to Buy Scheme was introduced in 2017 with the purpose of assisting first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. The relief is only available in respect of new builds, with a view to increasing the supply of new housing and stimulating demand.

The Help to Buy scheme has been a significant support for first time buyers of new homes. To 1 May 2024, the most recent data available, some 46,599 first-time buyers, either singly or as part of a couple, have benefited from the scheme.

As the Deputy is aware, Finance Act 2023 extended the Help to Buy scheme for a further year to the end of 2025. The scheme was also amended to enhance its interaction with the local authority affordable purchase scheme. This amendment will enable the use of the affordable dwelling contribution received through the affordable purchase scheme for the purposes of calculating the 70% loan to value requirement, thereby facilitating access for a greater number of affordable purchase scheme purchasers to the Help to Buy scheme.

The Deputy has previously raised concerns regarding the potential that the scheme may exacerbate housing prices, and, as has previously been stated, policy makers were aware at the time that the scheme was being developed that it was not without risk. Likewise, they were aware that there was a danger that, against a background of constrained supply, the initiative could serve to increase prices for new homes, thus potentially undermining to some extent the affordability aspiration of the scheme. However, on all occasions when the matter was formally examined to date, concerns in this regard were not borne out by the review data.

Studies carried out by Indecon Economic consultants found that the main driver of house prices was the mismatch between supply and demand rather than the existence of the scheme. Similarly, the review by Mazars in 2022, found that there is no definitive evidence that Help-to-Buy pushed up the price of new houses. In fact, Mazars found that the prices paid for new homes by people who received the Help to Buy relief were slightly lower than new house prices in the economy in general, likely because of the €500,000 price eligibility cap.

There have been some significant changes in the market even since the Mazars report on the scheme was published. The increase in interest rates in the intervening period means that further stability and certainty is needed for first time buyers who may now face higher mortgage interest rates. I decided that now is not the time for the withdrawal of supports for those purchasers. The extension of the Help-to-Buy for a further year to 31 December 2025 takes account of the need for certainty in the market pending the increase in new housing supply envisaged by the Government’s Housing for All strategy.

As I indicated on Budget Day, I confirm that the Help to Buy scheme will continue to be examined to see if any additional changes are necessary.

Michael McGrath (Cork South Central, Fianna Fail)
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The Help to Buy (HTB) scheme is administered by Revenue to assist first-time buyers with buying or building a new house or apartment. The scheme gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to qualifying criteria outlined in the legislation.

In the July 2020 stimulus plan, the scheme was amended so that the level of support available to first-time buyers was increased to the lesser of €30,000, increased from €20,000, or 10%, increased from 5%, of the purchase price of a new home or self-build property; or the amount of income tax and deposit interest retention tax paid in the four years before the purchase or self-build. The scheme was extended in its enhanced form in Budget 2021. The HTB scheme was extended in the Finance Act 2022 for a further two years to the end of 2024, and again in Finance Act 2023 for a further year to the end of 2025.

Applications for the HTB scheme may be made on a provisional basis as first-time buyers seek to clarify their entitlements in advance of commencing the purchase of a property. An application will only progress to the claim stage if and when the applicant decides to purchase a property that is eligible for the scheme. It is at the claim stage that the property address details become available.

I am advised by Revenue that the number of HTB claims approved since 1 July 2020, with an address in County Cork is 4,094, and the number of applicants associated with these claims is 7,519. These figures include data in relation to both purchases and self-builds.