Help-to-Buy may cut higher value homes in Budget overhaul
The Help-to-Buy scheme could return in October’s Budget but in a heavily capped form that would essentially exclude Dublin homes, the Sunday Independent has learned.
Finance Minister Paschal Donohoe plunged the future of the scheme into uncertainty when he refused to confirm that it would continue into next year.
The scheme provides a tax rebate of up to 5pc on the cost of a newly built property, up to a limit of €20,000. Currently, first-time buyers can claim the rebate on new homes worth as much as €600,000.
It is understood that the Minister is considering reducing the cap to as low as €250,000.
To date, the scheme has cost the State €196.2m over a 28-month period. In its first year, the scheme cost €85.1m.
Reducing the maximum value of suitable homes to €400,000 would cost the Exchequer €60m a year, a €25m annual saving, according to estimates from the Revenue Commissioners.
Such a reduction would essentially exclude new homes built in many parts of Dublin.
The average price paid for a new home in the Dublin City Council area last year was €525,901. In Dún Laoghaire-Rathdown, that figure rose to €648,512.
Should the scheme be limited to homes worth €300,000 or €250,000, it would have an annual cost to the Exchequer of €25m and €10m, respectively.
Either of those would ensure that no newly built properties in the Dublin area would qualify for the tax rebate scheme.
Construction Industry Federation (CIF) director general Tom Parlon said that the impact of the scheme being scrapped would be “nuclear”.
“We don’t have a problem if it was capped and certainly it could come down to €400,000 without having a major impact,” he said.
“It is going to exclude a certain cohort in Dublin and probably Dublin south, but even politically if it came down to €390,000, we could live with it.”
However, Parlon said having the scheme available for properties below €390,000 was “essential”.
The CIF chief said there had been a “slowdown” in the construction sector due to uncertainty around the scheme, Brexit, and difficulties in buyers securing mortgages.
“There was a time when you would have to put your name down in any development in Dublin; now you can walk into any one of them across the county and there are houses there to be bought,” he said.
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