Tuesday 21 February 2017

FF wants changes to 'fairy-tale' first-time buyers' initiative

Published 13/10/2016 | 02:30

Fianna Fáil is to demand a series of changes to the first-time buyers’ grant announced in the Budget. Photo: Brian Lawless/PA Wire
Fianna Fáil is to demand a series of changes to the first-time buyers’ grant announced in the Budget. Photo: Brian Lawless/PA Wire

Fianna Fáil is to demand a series of changes to the first-time buyers' grant announced in the Budget, the Irish Independent can reveal.

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The party, whose support is needed for the Budget to pass, wants a cost-benefit analysis of the scheme to be carried out and believes the €600,000 threshold is "fairy-tale stuff".

Fianna Fáil spokesman on housing Barry Cowen. Photo: Gareth Chaney/Collins
Fianna Fáil spokesman on housing Barry Cowen. Photo: Gareth Chaney/Collins

Its housing spokesperson Barry Cowen said: "This is an initiative that can't work."

He is concerned that the tax rebate worth up to €20,000 will fuel property price rises and do little to address supply.

"I don't agree with it at all but if it has to stay, it must get real," he said.

Fianna Fáil is unlikely to risk collapsing the Government over the issue - but intends to put huge pressure on Housing Minister Simon Coveney.

"The threshold levels being talked about are crazy. It's 'Back to the Future' stuff," said Mr Cowen. "It can't be implemented without a cost-benefit analysis."

Pointedly, he noted that the scheme announced on Tuesday wasn't part of the confidence and supply agreement which will see Fianna Fáil underpin the Budget.

The Offaly TD said he was "surprised" a cost-benefit analysis wasn't carried out but suggested this may be because the Government would not like the outcome.

He suggested the minister should look at different thresholds for urban and rural areas, adding that a first-time buyer spending €600,000 on a house has no need for State support.

The plan allows a first-time buyer to receive a 5pc tax rebate on a newly built home up to the value of €400,000.

Read more: Help-to-buy scheme 'will only fuel house price hikes'

Read more: First-time buyers big winners but no comfort for those hoping to trade up

Anyone purchasing a house worth between €400,000 and €600,000 will have their rebate capped at €20,000. But already the scheme has faced criticism from housing experts, who say it will only benefit developers.

However, Finance Minister Michael Noonan defended the scheme, saying it was "not a catch-all proposal" and was being criticised by those "who have no solutions themselves."

Mr Noonan said this was a solution to a "defined problem" and pointed out that you can't say it will put up prices because "these homes don't exist at the moment. There's a fault in the market there. The starter homes are not being built."

He added that he was sure the industry would respond and supply traditional three-bed starter homes - although it would apply to once-off rural homes too.

Taoiseach Enda Kenny said first-time buyers "have never had more difficulty in buying their first home".

"This Government makes no apology in our belief that home ownership is a good thing and should be facilitated as long as it is a sustainable arrangement for any prospective home owner," he said.

Health Minister Simon Harris was asked about criticism that the first-time buyer measure would overheat demand.

He said: "If we want people to build houses, and we know we now have a significant shortage of new homes being built, we have to make sure there's a market for that.

"While it's obviously a measure to try and help first-time buyers, particularly in the way of the deposit I outlined, it also has to be about trying to encourage people to increase supply because we need more houses built. We know that we've gone from a feast to a famine in terms of house building.

"We don't want to go back to building too much but we know we are building way too little and we need to try and increase it," said Mr Harris.

In the Dáil, Social Democrats co-leader Róisín Shortall asked: "Given the huge problems with which we are dealing, how can the Government justify making a €20,000 grant to people who can afford to buy a house worth €600,000?"

Irish Independent

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