Pádraig O'Sullivan (Cork North Central, Fianna Fail)
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168. To ask the Minister for Finance if he will address concerns in correspondence (details supplied); if there are any suitable schemes available to this person; and if he will make a statement on the matter. [23922/24]

Michael McGrath (Cork South Central, Fianna Fail)
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The Help to Buy incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax paid in the State over the previous four years, subject to limits outlined in the legislation. Section 477C of the Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to the scheme.

Help To Buy only applies where a mortgage is taken out to purchase or build a home and where the value of the qualifying loan is a minimum of 70% of the ‘purchase value’ of a purchased new build or 70% of the approved valuation of a self-build.

The Help to Buy scheme was originally intended to be limited to individuals who were taking out mortgages with at least 80% Loan-to-Value ratio. However, in the course of the Oireachtas debates on Finance Bill 2016, the relevant provision was amended to reduce the Loan-to-Value ratio to a minimum of 70% to ensure that first-time buyers do not feel compelled to borrow larger amounts in order to qualify.

The rationale for not reducing it further is that those who are in the position of being able to avail of a mortgage at a lower Loan-to-Value ratio are considered to have sufficient resources to more than meet the deposit requirements of the macro-prudential rules and thus less in need of assistance from the Exchequer. Lowering the Loan-to-Value ratio ceiling would therefore only increase deadweight in the scheme. In fact, the independent review of the scheme which took place in 2022 recommended that the Loan-to-Value ratio be increased to 80% for purchasers availing of Help to Buy.

As with all tax incentive schemes, there will always be individuals who do not meet the eligibility criteria. In designing tax reliefs, there is a balance to be struck between providing support to as many people as possible consistent with the overall policy intention behind the measure and ensuring that the limited Exchequer resources are managed appropriately.

As with all such tax expenditure, the conditions of the Help to Buy scheme remain under review. However, it is a long-standing practice of the Minister for Finance not to comment, in advance of the Budget, on any matters that might be the subject of Budget decisions. I would add that any such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines.