Michael McGrath (Cork South Central, Fianna Fail)
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The Help to Buy (HTB) 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 incentive gives a refund of Income Tax and Deposit Interest Retention Tax (“DIRT”) paid in Ireland over the previous four years, subject to limits outlined in the legislation. Section 477C of the Taxes Consolidation Act outlines the definitions and conditions that apply to the HTB scheme and provides that the amount of relief available shall be the lesser of:

• €30,000,
• 10 per cent of the purchase value of a new home/self-build property; or,
• the amount of Income Tax and DIRT paid in the four years before application for the relief.

An increase in the supply of new housing remains a priority aim of Government policy. HTB is specifically designed to encourage an increase in demand for new build homes in order to support the construction of an additional supply of such properties. For a property to qualify for HTB, it must be new or converted for use as a dwelling, having not been previously been used as a dwelling. Additionally, the purchase value/approved valuation of the property must not exceed €500,000.

One condition of the scheme is that a qualifying first-time purchaser (“FTP”) must take out a loan in an amount equal to at least 70% of the purchase value of the property. In the case of a self-build property, the purchase value is the approved valuation of the self-build property, as approved by the lender in accordance with the Central Bank’s macro prudential rules. These rules stipulate the valuation should include the site value.

The HTB scheme, was initially intended to be limited to persons who had mortgages with a minimum LTV of 80%. However, Central Bank data indicated that a sizable number of first-time buyers take out a mortgage with a LTV of less than 80%. As such, it was decided to amend the scheme in the subsequent Finance Bill to set the minimum LTV at 70% so as to ensure that first-time buyers did not feel compelled to borrow larger amounts than they would have otherwise in order to qualify for the scheme.

Individuals who are in the position of being able to avail of a mortgage at a lower loan-to-value ratio than 70% are considered to have sufficient resources to meet the deposit requirements of the macro-prudential rules and thus less in need of assistance from the Exchequer. Lowering the LTV ceiling would therefore only increase dead-weight in the scheme. In fact, the independent review of the scheme which took place in 2022 recommended that the LTV be increased to 80% for purchasers availing of HTB.

It remains the case that, as with any tax expenditure, HTB will be kept under regular review. However, I have no plans at present to change the loan to ratio value under the scheme.