Government won't offer incentives for first-time buyers in upcoming Budget
Published 19/09/2015 | 02:30
The Coalition has no plans to offer any incentives to first- time buyers in the forthcoming budget.
And there are also no plans by Fine Gael or the Labour Party to include sweeteners for young people struggling to get on the property ladder in their election manifestos.
The news will come as a huge disappointment to thousands of people hoping to buy their first homes but who are priced out of the market by soaring house prices and strict Central Bank rules on mortgage down payments.
Yesterday, Finance Minister Michael Noonan urged the Central Bank to review caps for first-time buyers.
However, the Central Bank insisted that, while it was monitoring lending rules, it has no plans to carry out a special review.
Earlier this week, Tánaiste Joan Burton signalled that she would like to introduce measures which would help people buy their first home in the face of a warning from international think tank the OECD, which said the Government should not tinker with the housing market.
Health Minister Leo Varadkar yesterday expressed caution about introducing measures that could cause a repeat of some of the mistakes made in the past.
Mr Varadkar said his generation rushed to buy properties prior to the introduction of a mortgage cap.
"I think what the Central Bank and the regulators in any Government have to do is to balance, on one hand, our absolute desire that young people are able to buy their own home, but at the same time ensure those young people don't actually lose out by having to buy houses in an escalating property market," he said.
Both Fine Gael and Labour yesterday insisted they currently have no plans to pledge "sweeteners or incentives" to help first-time buyers in their election manifestos.
A Fine Gael spokesperson said the party wanted to concentrate on making property affordable rather than introducing tax breaks or savings schemes.
"It's more about what we are not going to have, and what we are not going to have is a return to an incentivised property bubble paid for by taxpayers," he said.
A Labour spokesman said the party was looking at a "whole range of things" related to housing affordability but said nothing related to first-time buyers has been finalised.
"Issues around affordability will form a substantial part of manifesto. There are no further details at this stage," he said.
A Department of Finance spokesman also said there are no plans to introduce measures to help first-time buyers in the Budget.
Fianna Fáil has promised to roll out a saving scheme for first-time buyers to make buying homes more affordable.
The party said it would be similar to the SSIA scheme which was introduced during the Celtic Tiger era.
Mr Noonan's comments on mortgage caps come at a time when the Government is choosing a Central Bank governor to replace Patrick Honohan.
Some 30 applications were under review, with a shortlist of three candidates due be interviewed soon.
The minister may be trying to influence the thinking of the next governor, banking sources said.
Mr Noonan is due to meet Mr Honohan, and he said the Central Bank was committed to a review of the lending caps.
He said builders had told him the regulations were too restrictive and contributing towards the shortage of homes.
"People are paying more in rents than they could pay for a mortgage. Starter homes are not being built," he said.
"Market conditions are changing rapidly and there are aspects of it now which, according to the construction industry, are inhibiting starter homes," he said.
"All I'm saying is the bank should review. If the bank say we're not changing anything, then of course I'll accept that," he said.
In response, the Central Bank said it was continually reviewing the impact of the rules.
Under the rules, first-time buyers need to have a 20pc deposit for mortgage amounts over €220,000.
In addition, people are only allowed to borrow 3.5 times their income as a mortgage. Mr Noonan said that element could be "tweaked".
Mr Noonan said he was still looking at hiking the levy on banks if there are not more cuts in variable rates for existing mortgage holders.
He said allowing the Central Bank to determine what the rate would be would "kill the market".