Tuesday 21 February 2017

Most first-time buyers won’t receive Budget grant

Proposal would limit €10,000 payment to newly built homes sold for €350,000 or less

Kevin Doyle and Niall O'Connor

Published 29/09/2016 | 02:30

Purchasers of second-hand homes will not be entitled to any State aid, despite the fact that construction of new builds is moving at a snail’s pace. Photo by Matt Cardy/Getty Images
Purchasers of second-hand homes will not be entitled to any State aid, despite the fact that construction of new builds is moving at a snail’s pace. Photo by Matt Cardy/Getty Images

The first-time buyers' grant to be unveiled on Budget Day will be meaningless to the vast majority of young people searching for a home, the Irish Independent can reveal.

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Purchasers of second-hand homes will not be entitled to any State aid, despite the fact that construction of new builds is moving at a snail's pace.

Proposals submitted by Housing Minister Simon Coveney to the Department of Finance limits support to brand new homes and suggests that the grant should only apply to properties costing in the region of €350,000 or less.

However, figures show that only 269 new houses were built in the Dublin city area in the first eight months of this year, while Cork and Galway cities saw just 68 and 32 new houses respectively.

Nationally, 3,796 new homes and 1,561 apartments have been built this year.

The final make-up of the scheme has not yet been finalised, as Mr Coveney and Finance Minister Michael Noonan have different visions for how it will work.

Sources say it will be paid through either a grant or tax rebate and will be worth "at least €10,000, as anything less would not have an impact".

It is understood that officials in the Department of Finance have "reservations about a scheme tailored towards new builds".

But Mr Coveney is strongly arguing that this will encourage builders to construct affordable homes.

"The key to this is to get supply started but it's true that it will take some time for those houses to come on stream," a source said.

Discussions are still ongoing as to the threshold at which buyers will no longer qualify for the money.

Mr Coveney is understood to want a low threshold, somewhere between €280,000 and €350,000.

The average price of a semi-detached home in central Dublin is €373,333, dropping to €260,000 in north County Dublin.

Dr Lorcan Sirr, lecturer in housing at DIT, told the Irish Independent that the plan is "a way of giving money to the construction industry without making it look like you are".

He said it contradicts two aims in the Government's action plan, namely to provide affordable housing and to use vacant stock.

"It won't help in the reuse of existing stock. It's never a good idea. It serves to push up prices. This is old hat stuff," he said.

Challenges In a further blow for Mr Coveney, Fianna Fáil has hardened its opposition to the rebate plan.

A senior party source said the proposals could "inflame the market" and will not address the core challenges facing first time buyers, such as the Central Bank lending rules.

Fianna Fáil's Housing Spokesperson Barry Cowen is due to meet Mr Coveney later this week and recommend a different approach entirely. Mr Cowen and his party are now pressing for the introduction of a 'government equity loan' scheme, similar to what's available in the UK.

This involves the State taking equity in the house itself in return for the issue of a loan.

Legislation is already in place for such a scheme.

Irish Independent

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