Backlash from new home buyers who will miss out on tax relief
Published 26/09/2016 | 02:30
The Government is facing a backlash from first-time buyers who will be locked out of a lucrative tax relief scheme.
The Budget is expected to feature a new tax relief measure, worth as much as €10,000, to offset the impact of the Central Bank rules.
However, TDs are already getting queries from anxious buyers who fear they won't be covered because they bought just before a mid-July deadline.
The Irish Independent has learned that any hopes of opening the scheme to earlier purchases have already been dashed by Finance Minister Michael Noonan, who has ruled it out, saying it would make the plan "less targeted" and "more costly".
The precise details of the proposals won't be made public until Budget Day, October 11.
However, it's understood that the help-to-buy scheme will take the form of a tax rebate - a figure of €10,000 has been suggested - targeted at those buying affordable new-build homes.
Such properties are priced at €300,000 in Dublin and €250,000 in Cork and Galway.
The scheme will be backdated to July 19, the day the government's Action Plan for Housing was announced.
This was done so that sales to first-time buyers wouldn't be stalled between then and the announcement of the full details in the Budget.
However, TDs around the country have already been contacted by people who are angry they won't be included, or who are anxiously seeking information to see if they'll be eligible.
Anti-Austerity Alliance TD Mick Barry, Fine Gael's Josepha Madigan and Peter Fitzpatrick, as well as Fianna Fáil's Billy Kelleher, all confirmed that they had been contacted.
Dublin Fingal TD Clare Daly asked Mr Noonan if he would consider backdating the scheme to the start of July.
Mr Noonan has acknowledged that "there may be individuals who are disappointed".
He added: "As with all time- limited reliefs, there will always be people who just miss out."
The minister said that extending the parameters of the scheme would mean it is "less targeted and more costly".
Mr Barry said he had contact from a constituent who was "aggrieved" that his purchase of a new home prior to the deadline means he won't be eligible.
"I'm sure there were significant numbers of people who bought houses two, four, six weeks before the cut-off point," he said.
The Cork North Central TD said his primary concern is that any scheme ensures that it's the buyer that benefits and developers won't be able to engage in "profiteering".
Dublin Rathdown TD Ms Madigan also said she has had multiple queries.
However, she defended Mr Noonan, saying "we're not going to catch everybody in the loop" and insisted he is "trying to take a balanced approach".
She thinks it was a "reasonable" date to use, adding: "They didn't want people deferring purchases pending the commencement of it."
Ms Madigan also wants pressure on the Central Bank to loosen what she described as"draconian" mortgage rules.
Mr Kelleher, also of Cork North Central, said: "If you draw an arbitrary line anywhere... then there's going to be people who won't qualify.
"But at the same time there's a lot of people out there who'll benefit from that extension."
The July deadline will mark a serious setback for families who bought earlier this year who already had to cope with Central Bank mortgage restrictions.
These rules require some 10pc of the first €220,000 required to be saved, and 20pc of the balance thereafter.
However, a senior official at the Central Bank said it doesn't intend to change the restrictions as part of its review of the rules, due in November.
Deputy governor Sharon Donnery said it would be "unwise" to change the rules.
The Professional Insurance Brokers Association described as "an absurd situation" the fact that the Government feels compelled to give tax relief to offset the impact of the rules.
"Let's face it, that is bureaucracy gone mad, one arm of the State restricting lending and the other arm trying to find a release valve," said chief operations officer Rachel McGovern.