Dáil Éireann Debate, Wednesday - 8 June 2016
139. Deputy Seán Haughey asked the Minister for Finance the measures he is taking to assist first-time buyers; if he is aware that some banks are insisting on a 20% deposit in the case of first-time buyers purchasing a one-bedroom apartment in the north Dublin area; and if he will make a statement on the matter. [14524/16]
View answerPrimary responsibility for the broad scope of housing policy is a matter for my colleague Simon Coveney TD, Minister for Housing, Planning and Local Government. He is developing an Action Plan for Housing and, having regard to the number of Departments and agencies which will have an involvement in that Plan, its formulation and implementation will be overseen by An Taoiseach and the new Government Committee on Housing. As indicated in the Programme for a Partnership Government (PfPG), this Action Plan will be a collaborative process and will draw on the work of the Oireachtas Committee on Housing and Homelessness as well as the actions laid out in the PfPG itself.
The Central Bank is independent in the formulation and implementation of macro prudential policy. The existing macro prudential measures for residential mortgages lending, which were introduced last year, adopted a general 80% loan to value (LTV) mortgage threshold for primary dwelling residential lending purposes but they also had regard to the particular situation of first time buyers and provided for a 90% LTV threshold for such borrowers in respect of the value of a property up to €220,000. Nevertheless, subject to compliance with the overall constraints of the macro prudential measures (and also other relevant regulatory requirements), it remains a commercial matter for individual lenders to set their own lending policies and to make their own individual lending decisions. However, as the Deputy will be aware, the Central Bank will carry out a review of the current macro prudential rules later this year and that the Bank has indicated that the existing measures can be recalibrated if the evidence suggests that such an adjustment would be warranted. It is recognised in the PfPG that some first time buyers may face difficulties in accessing mortgage finance to purchase a house and to that end the PfPG, as one of the range of measures in the area of housing, commits the Government to work with the Central Bank, as part of its up-coming review of its mortgage lending limits, to develop a new "Help to Buy" scheme to ensure availability of adequate, affordable mortgage finance or mortgage insurance for first time buyers as new housing output comes on-stream.
From a taxation perspective, the PfPG also makes reference to a "temporary targeted reduction of the rate of VAT from 13.5% to 9% on new, affordable houses and apartments, both public and private, timed to generate the maximum impact on supply and to target principally the purchasers of affordable homes". However, I understand that such a VAT amendment would be very complicated to implement and may not deliver the relief to the purchaser, but instead would be absorbed by the builder. As the proposal is aimed at targeting the affordability of homes from the position of the purchasers, I do not believe such a VAT amendment would be of assistance. As an alternative, and as I stated at the Oireachtas Committee on Housing recently, I have asked my Department to examine an approach through the income tax system, perhaps similar to the Home Renovation Incentive, in which relief could be provided to home purchasers.
It should also be noted that section 266A of the Taxes Consolidation Act 1997 provides for refunds of deposit interest retention tax (DIRT) to first-time buyers who purchase or self-build a property for occupation as their home. The property must be purchased or self-built between 14 October 2014 and 31 December 2017. A first-time buyer who has either individually or jointly with any other person previously purchased or built a property is not eligible for a DIRT refund. The amount of the refund is capped at the DIRT paid on savings of up to a maximum of 20% of the purchase price or, in the case of a self-built property, up to 20% of the market value of the completed property.
