Dáil Éireann Debate, Tuesday - 7 March 2017
145. Deputy Niamh Smyth asked the Minister for Finance if he will review various scenarios (details supplied) with regard to the help-to-buy scheme; if he will address the disadvantages for those planning to build, particularly in the constituency of Cavan-Monaghan; and if he will make a statement on the matter. [11181/17]
View answerThe commencement date for the Help to Buy scheme of 19 July 2016 was chosen as it was the date of the launch of 'Rebuilding Ireland - Action Plan for Housing and Homelessness', in which the development of such a scheme for inclusion in the Budget was initially announced. The intention to backdate the scheme to this date was announced at that time with a view to avoiding any potential interruption in house sales, by purchasers who may otherwise have deferred purchases, pending the commencement of the incentive.
One of the primary policy aims of the incentive is to assist those struggling to save for the deposit required in purchasing a house. Individuals who contracted to purchase new homes before the announcement of the incentive, did not need the assistance of the State to fund the required deposit. Such individuals made their purchasing decisions on the basis of the information available to them at the time of purchase, and could not have expected a subsequently introduced tax relief to also be available to them. Similarly, those who commenced the drawdown of agreed mortgages in respect of self built properties before 19 July 2016, could also not have expected a subsequently introduced tax relief to be available to them. It is not clear from the example provided by the Deputy, whether the couple purchasing off plans entered into a contract to purchase on 17 July, or merely put down a booking deposit. If it was the former then the couple would not be eligible for a tax refund under the Help to Buy incentive, as the contract would have been entered into before 19 July 2016.
Furthermore, I do not believe that having separate criteria for applicants that are purchasing a new build, or those undertaking a self build, means that either group are disadvantaged in the manner suggested by the Deputy. The scheme aims to assist a first-time purchaser with funding a deposit at the outset of the purchase or self building process. However, there are inherent differences in the relevant processes. For a purchaser buying a new build, the first major expenditure is the point at which they enter into a contract to purchase and pay over the deposit, which is usually 10% of the value of the home. This is usually some time before a mortgage is drawn down or a purchase is completed. For a self-build property, the first major expenditure usually coincides with the draw down of the first tranche of the relevant mortgage, and thus the refund is payable at this point in respect of self builds.
