Budget 2017: New help-to-buy scheme explained

11/10/2016 The Irish Times

Income tax rebate for first-time buyers aims to boost housing supply and property market

The budgetary measures on housing were long anticipated to address affordability, inadequate levels of new homes construction, low housing stock and rapidly rising rents.

What’s the silver bullet then?

Well . . . a help-to-buy scheme for first-time buyers that will give a rebate of income tax of 5 per cent of the purchase value of a newly built home, up to a value of €400,000. That translates to a maximum rebate of €20,000 in cash. Properties costing from €400,000 to €600,000 will qualify for the €20,000 rebate, but the scheme will not apply to homes over €600,000 in value. It will be back dated to July 19th last and will run until the end of 2019.

Brilliant, a first-time buyer’s grant with a different name. So anyone buying a house for the first time will get a leg up on to the property ladder?

No. It only applies to buyers of newly built homes. For a new house costing €300,000, a couple buying their first home will get a rebate worth €15,000, but they will still need to save €23,000 for a deposit and have a combined income of about €75,000 to meet the mortgage rules. So many Dubliners dreaming of one day buying a house close to where they grew up can forget it. And with a cap of €600,000 on the value of the new home, they can start swotting up transport routes to and from the wider Dublin area, pushing into Kildare, Meath, Louth and Wicklow.

That seems a bit unfair?

Not if you’re happy to live outside Dublin. The idea is to kickstart new homes building at a more affordable level. Developers insist the margins just are not there at the moment for them to build starter homes, and the banks will not finance them anyway. The current focus in Dublin is on pricier developments aimed at the cash-rich trading up or down. help-to-buy is likely to have the greatest impact outside Dublin initially, and even then there is going to be a time lag as we wait a couple of years for new homes to come onstream.