Help-to-Buy scheme for first-time buyers 'set for year extension'
Fianna Fáil drops plan to abolish tax break for first-time buyers
The controversial Help-to-Buy scheme looks set to be extended for another year after Fianna Fáil dropped its opposition to the tax break for first-time buyers.
The Fianna Fáil U-turn on the first-time buyers scheme comes despite widespread criticism of the tax rebate.
The Government tax break of up to €20,000 has been blamed for inflating property prices during the housing crisis.
Critics have also said the scheme is benefiting only house buyers at the higher end of the market.
When appointed Fianna Fáil housing spokesperson, Darragh O'Brien said he would move to abolish the scheme during Budget talks with Fine Gael.
However, it is understood Fianna Fáil will no longer seek to have the tax break dropped during negotiations in the coming weeks.
The moves means the Government can now extend the tax break for another year.
Yesterday, one Fine Gael minister said the scheme was working and should be extended.
"The data shows it is having an impact and reaching the people we want it to reach," the minister said.
Finance Minister Paschal Donohoe's spokesperson said he would not discuss Budget matters.
Earlier this week, the Construction Industry Federation (CIF) also called for the Help-to-Buy scheme to be extended.
Speaking at the Oireachtas Budget Oversight Committee, CIF director general Tom Parlon said: "This measure has been instrumental in enabling housebuilders to build first-time buyer starter homes again.
"This has removed first-time buyers from the second-hand market for larger homes, reducing acute demand in these segments.
"Most importantly, it has created a market of viable buyers for starter homes again. Certainty around this measure it is critical to give confidence to the banking system and the housebuilder community," Mr Parlon added.
However, Central Bank Governor Philip Lane previously told an Oireachtas Finance Committee hearing he believed the tax break was driving up house prices.
A report from economic consultants Indecon for the Government found that while there was no evidence that the scheme was leading to an increase in house prices or new supply, some borrowers who were not in need of support could be availing of the relief.
The Help-to-Buy scheme was introduced in 2017 to assist first-time buyers struggle to meet the Central Bank's strict mortgage rules.
The Irish Independent previously revealed 12,364 people applied for tax rebates potentially worth €68.9m under the Help-to-Buy scheme between July 19, 2016 and January 2, 2018. This would equate to an average tax refund of almost €14,300. Of these, some 5,392 claims have been made, of which 4,824 have been approved.
Of the 5,392 claims, some 2,052 (38pc) are in Dublin.