First-time buyers in rush for new tax break as 25 apply every hour
More than 25 applications are being made every hour by first-time buyers (FTBs) hoping to avail of a Government scheme to help them buy a home.
Figures from the Revenue Commissioners show that 519 people have applied for a Government incentive to help them secure a deposit under the Help-to-Buy scheme since it was launched on Tuesday.
Announced in October's Budget, the scheme allows first-time buyers of new homes or those self-building a property to claim an income tax rebate of up to €20,000 to fund a deposit.
The scheme, which is aimed at helping buyers save the necessary deposit but also to drive construction of houses, allows for a refund of DIRT or income tax paid over the previous four years, but not USC or PRSI.
Applications must be made online through the Revenue Commissioners.
As of 1pm on Tuesday, the day the scheme opened, some 120 online applications had been made. By 4pm yesterday, the number had grown to 519. This equates to just over 25 applications being made every hour.
If the maximum rebate of €20,000 is claimed by each applicant, it will cost the State almost €10.4m in foregone taxes. The full year cost is expected to be some €50m.
The figures come as the Exchequer returns showed that the amount collected in stamp duty, which is levied on the purchase of property, was below forecast for 2016.
The Department of Finance said €1.194bn was collected in the last 12 months, but that €1.268bn had been expected. The take was 5.9pc, or €75m, below projections.
Peter Vale, a tax partner at Grant Thornton, said the stamp duty returns were "surprising".
"Perhaps surprisingly, stamp duty did not perform as well as expected in 2016," he said.
"With recent data showing an expected increase in house prices this year, we may see a recovery in stamp receipts, although nothing close to the levels witnessed during the boom years."
The introduction of Help-to-Buy has raised concerns that it would fuel price rises, which were projected to grow by 10pc in 2017, according to a report from myhome.ie.
This is due to the introduction of the lucrative tax break, coupled with a relaxation of borrowing restrictions for buyers and a shortage of new homes coming on stream.
The most recent figures showed that just 11,800 homes were completed in the first 10 months of last year, and some 14,000 were expected to have been delivered when the final tallies for 2016 were completed. This is far short of the 25,000 needed just to keep pace with existing demand.
The Government has agreed to an independent assessment by next September on the impact that Help-to-Buy has on prices.