I propose to take Questions Nos. 293, 297, 298, 300, 302 to 304, inclusive, 331 and 362 together.
The Help to Buy scheme (HTB) is designed to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to limits outlined in section 477C of the Taxes Consolidation Act 1997 (TCA).
Last week, I announced a temporary enhancement to the HTB for the remainder of 2020 as part of the July Stimulus Package. It will provide for an increase to the maximum HTB relief available to €30,000 (up from €20,000), subject to certain conditions. The decision to include this measure was mindful of the findings of two previous studies on the scheme carried out by Indecon Economic Consultants. The later of the two studies (2018) found that the main driver of house prices was the mismatch between supply and demand rather than the existence of the scheme and that that following the introduction of the incentive there was a marked increase in supply which could be attributed in part to HTB.
The legislation to give effect to this increase is set out in the Financial Provisions (Covid-19) (No.2) Bill 2020, which was published on 24 July 2020 and must pass through the various stages in the Oireachtas before it can be enacted.
In summary, the changes to the scheme provide that where applicants enter into a contract for the purchase of a new house or apartment, or make the first draw down of the mortgage in the case of a self-build property, during the period from 23 July 2020 to 31 December 2020, they will be eligible for increased relief under the HTB scheme to the lesser of:
- €30,000 (increased from €20,000),
- 10 per cent (increased from 5 per cent) of either the purchase price of the new home or, in the case of self builds, the completion value of the property, or,
- the amount of Income Tax and DIRT paid in the four years prior to making the application.
Revenue are currently updating their systems to give effect to the enhanced HTB relief.
Where applicants have made an HTB application with Revenue but believe they may satisfy the requirements of the enhanced HTB relief, then, when the Revenue system is updated to cater for the new enhanced relief, the applicants may cancel their original HTB application and reapply to avail of the increased relief. Revenue will be issuing further guidance on the enhanced HTB in due course.
If a taxpayer is uncertain about whether he/she, or whether the particular contract that he/she has entered into, satisfies the conditions to avail of the enhanced HTB relief, the taxpayer should contact Revenue via the My Account online service giving full details of the specific circumstances including, where relevant, a copy of the contract in question. Each such case will be considered on a case by case basis by reference to its circumstances and the conditions that must be satisfied to avail of the relief.
In relation to tax paid in the previous four years, as with Revenue refunds generally payments made under the Help-to-Buy incentive are refunds of tax paid (including DIRT) to the Irish Exchequer over the previous four years immediately prior to the application, this four year look back is standard for all Revenue transactions. In order to qualify for the Help-to -Buy incentive, an individual or couple must have paid tax in Ireland for at least one of the previous four years. There is no requirement that this be the most recent of these years. The incentive is scheduled to operate until the end of 2021, meaning tax paid in Ireland this year could also be eligible for subsequent refund under the scheme at a later date.
It is important focus on the delivery of additional housing supply. With regard to actual housing completions this year, I am conscious that there is likely to be a significant shortfall in 2020 as compared to the targets which were envisaged in the Rebuilding Ireland Action Plan for Housing and Homelessness. This temporary enhancement to the Help to Buy is intended to stimulate construction activity and help to get us back on track for the rest of 2020.
The date of the announcement of the changes (23 July) was chosen as it ensures a consistent approach on the issue of cut-off dates within the scheme since its inception on 1 January 2017 (and backdated to the date of the original announcement on 19 July 2016).
In relation to the possibility of back-dating the measure; backdating the changes to a date before 23 July would not have any incentive effect for purchasers, self-builders or developers and consist of deadweight. Individuals who purchased new homes did so without the expectation of the additional relief. Similarly, those who commenced the drawdown of mortgages in respect of self-built properties before 23 July would also not have expected the subsequently introduced additional tax relief to be available to them. Unfortunately, as with all time bound reliefs, there will always be those who just miss out on qualification. However, for the reason already mentioned, I do not propose to change the start date for the temporary enhancement to the scheme.
