Sunday 4 December 2016

Budget 2017: First-time buyers' grant to be available for limited time only

Published 06/10/2016 | 02:30

The first-time buyers’ grant worth up to €20,000 will only remain in place for a limited time period. GETTY
The first-time buyers’ grant worth up to €20,000 will only remain in place for a limited time period. GETTY

The first-time buyers' grant worth up to €20,000 will only remain in place for a limited time period, the Irish Independent can reveal.

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Finance Minister Michael Noonan will set a deadline for applications, which could be as short as two years, in his Budget Day speech next week.

Mr Noonan (pictured) and Housing Minister Simon Coveney have had extensive discussions
about the application of the scheme, with much debate over the upper limit for applications. Photo: Tom Burke
Mr Noonan (pictured) and Housing Minister Simon Coveney have had extensive discussions about the application of the scheme, with much debate over the upper limit for applications. Photo: Tom Burke

It is understood that Mr Noonan wants the tax rebate to help "kickstart" the construction industry but not to become a standard measure.

"The idea is to stimulate the market so once it hits a certain level then you stop the incentive," said a source.

The minister is expected to put a definitive timeframe for the duration of the 'Help to Buy' scheme into his Budget speech next Tuesday.

"Any tax incentive is a cost to the State. It's the same as spending cash these days, so it's prudent to put an end date on it," the source said.

The Government's housing plan, 'Rebuilding Ireland', is based on package of measures until 2021 but it is expected that the first-time buyers' grant will have a much shorter lifespan, possibly just two years.

Final details of how the grant will work, including the thresholds for qualification, are still being finalised.

First-time buyers will be able to claim 5pc of the value of a new build back through an income tax rebate.

Read more: Revealed: How long it takes to get a deposit for a mortgage

Read more: Why first-time buyers need no Budget help - says economist

Mr Noonan and Housing Minister Simon Coveney have had extensive discussions about the application of the scheme, with much debate over the upper limit for applications.

One source told the Irish Independent that there is a strong argument for homebuyers spending up to €400,000 to benefit. This would mean the maximum grant would be €20,000.

The money is likely to be paid into a holding account while a house-hunter works through the process of buying.

"You'd have to have the money in the bank in order to use it as part of your mortgage application," said one person familiar with the process.

Ministers will be keen to stress that the fund is aimed at first-time buyers and not builders.

The Central Bank's loan-to- income-ratio rules will be cited as one way of preventing house prices from rising on the back of the new scheme.

The grant is set to be a big topic at the Construction Industry Federation's conference in Dublin, where Housing Minister Simon Coveney will meet with key stakeholders.

Fianna Fáil is understood to have expressed serious reservations about the tax rebate system to the Department of Finance during the Budget negotiations.

The party pressed for the introduction of a government equity loan scheme, similar to what is available in the UK.

This involves the State taking an equity stake in the house itself in return for a loan being issued. Legislation is already in place for such a scheme.

However, Fianna Fáil has accepted defeat on the issue and will allow Fine Gael's plan to pass as part of the Budget under its confidence and supply agreement.

Irish Independent

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