Dáil Éireann Debate, Tuesday - 14 July 2020
278. Deputy Matt Carthy asked the Minister for Finance his plans to amend the help-to-buy scheme for persons who build their own home in order that the reckonable limits apply to the cost of the home rather than the loan to value, LTV, rate in view of the fact that the current conditions discriminate against rural dwellers who build on their own land; and if he will make a statement on the matter. [15700/20]
View answerThe purpose of the Help to Buy incentive is to help first-time buyers fund their first home, which may be purchased from a builder or self-built. The incentive applies for the period from 19 July 2016 to 31 December 2021 (having recently been extended by a further two year period in Finance Act 2019). The legislative provisions for the Help to Buy incentive are set out in Section 477C of the Taxes Consolidation Act 1997.
Currently, in order to avail of the Help To Buy incentive, the loan-to-value ratio (LTV) for a property must be 70% or more. In the case of a self build residence, the lender will apply a valuation using the Central Bank macro prudential mortgage rules, which consists of the aggregate of the market value of the land and the estimated costs of construction.
The scheme as announced in Budget 2017 was limited to persons who had mortgages with a minimum LTV of 80%. However, Central Bank data indicated that a sizeable number of first-time buyers take out a mortgage with a LTV of less than 80%. It was decided to amend the scheme in the Finance Bill to set the minimum LTV at 70% so as to ensure that first-time buyers did not feel compelled to borrow larger amounts than they would have otherwise in order to qualify for the scheme.
I do not believe that it would be fair or equitable to allow for different eligibility criteria with regard to loan-to-value ratios in respect of self-build properties vis a vis that which applies to all other new build homes. As such, there are no plans to amend the scheme in the manner that has been proposed by the Deputy.
