Help-to-buy scheme 'will only fuel house price hikes'
Published 12/10/2016 | 02:30
The help-to-buy scheme for first-time buyers has already sparked warnings about higher property prices and increased competition for limited homes.
The scheme, in which buyers will receive a rebate of up to €20,000, has also been criticised for being inequitable - as it provides a higher relief for purchasers of more expensive properties.
The Society of Chartered Surveyors (SCSI) warned the Government should have focused on initiatives to "make development viable".
Its president, Claire Solon, said it wanted to see Budget measures cutting VAT on affordable housing, making public land available for affordable housing schemes, and providing finance to help kick-start building work. She added that in the short term, the scheme would see greater competition and higher prices being sought.
Dr John McCartney, Director of Research at Savills Ireland, said the measure would drive up builders' profits and accused the Government of "blotting out" reducing VAT because it would have looked "too much like a handout for developers".
The Government expects just 14,500 homes to be completed this year, far less than the 25,000 needed to meet demand.
Fianna Fáil housing spokesman Barry Cowen said the help-to-buy scheme was a "lazy initiative" which failed to address the "real problem".
He said the rebate, which is based on 5pc of the property value up to a maximum of €20,000, should have been capped, so all first-time buyers would benefit equally.
"I hope it works, I don't think it will. I would have looked to cap the relief to encourage the construction industry to build up to a maximum price instead of looking at Dublin prices," he said.