Friday 21 October 2016

FF: €600,000 limit means Help-to-Buy plan is an 'off-the-wall mansion grant'

Published 14/10/2016 | 02:30

Fianna Fáil’s housing spokesman Barry Cowen said the Government’s Help-to-Buy scheme would benefit developers. Photo: Tom Burke
Fianna Fáil’s housing spokesman Barry Cowen said the Government’s Help-to-Buy scheme would benefit developers. Photo: Tom Burke

AN independent analysis of the Help-To-Buy scheme, which has been branded a "mansion grant", was carried out, the Government has insisted.

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Education Minister Richard Bruton has defended the tax rebate amid claims it will benefit wealthy people and push up the price of new homes.

Fianna Fáil's Barry Cowen described the €600,000 threshold to qualify for the scheme as "off the wall".

"The average overall cost of providing a three-bed semi-detached house of 1,214 sq ft in the greater Dublin area is €330,493, including VAT.

"The €600,000 limit is almost double this, which effectively turns the scheme into nothing more than a mansion grant," he said.

Mr Cowen said a couple buying a home for €600,000 would require a deposit of at least €98,000 and an income of €145,000.

"A couple earning this when starting out in life does not need €20,000 from the State, which is struggling to tackle a social housing waiting list of 130,000 homes," Mr Cowen added.

"It means ordinary taxpayers are directly subsidising people earning four times the average wage to buy a home worth three times the national average price of a three-bed semi-detached house," he told the Dáil.

Mr Bruton said the Government wants to address the lack of starter homes being built.

"There are plenty of expensive homes for trading up. There is a real problem in the starter home market."

Read more: 'First-time buyers' allowance is madness, wasteful and inequitable' - Independent TD

He said Housing Minister Simon Coveney wanted to help young people achieve a deposit which would meet the requirements set down by the Central Bank for getting a mortgage.

"First-time buyers buying new homes will get a tax rebate of up to €20,000 and this will, effectively, be immediately reckonable towards the deposit requirement," he said.

Mr Bruton added that this would "immediately" help young people.

However, Mr Cowen said it was a "help to sell scheme" that would benefit developers.

The Offaly TD cast doubt on Mr Bruton's statement that the Department of Housing had commissioned an independent assessment of the scheme, saying he doubted "very much" that they had.

A spokesperson for Housing Minister Simon Coveney told the Irish Independent his department carried out a wide-ranging assessment of the property market during the summer which included issues around the lack of supply for first-time buyers.

"For an entire generation, the basic aspiration of home ownership is slipping away," Mr Cowen said.

"The dream of having a place to call one's own around which one can build a vibrant family life and play an active role in the local community is disappearing.

"Instead of putting down roots, young people are paying up to landlords," he said.

The Social Democrats' Roisin Shortall criticised Fianna Fáil, saying they want to "sit on both sides of the fence" and were slow to realise the problems with the first-time buyers' grant.

"It was clear in the immediate aftermath of this announcement that it would run the risk of artificially inflating house prices and ultimately benefiting developers rather than buyers," she said.

No help to buy for emigrants

Emigrants returning from abroad are unlikely to be able to qualify for the first-time buyers' grant worth up to €20,000.

The scheme is based on home-buyers being eligible for a tax rebate at a rate of 5pc on the cost of a new home worth up to €400,000. Purchasers buying a property up to a threshold of €600,000 are also entitled to support - but the relief will be capped at €20,000. However, the rebate will be based on income tax paid over the previous four tax years.

This means someone who has spent four years or more abroad is likely to be excluded.

Before the Budget, there was controversy after the Department of Jobs suggested that emigrants should be encouraged to return home with a special tax rate. This was shot down by the Taoiseach.

Fianna Fáil's spokesman on finance Michael McGrath said denying returning emigrants access to the scheme "raises fundamental issues of fairness".

Irish Independent

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