Dáil Éireann Debate, Tuesday - 15 September 2020
267. Deputy Ged Nash asked the Minister for Finance the advice received by his officials regarding the revised help-to-buy scheme announced in the July stimulus package; the projected deadweight cost of the scheme; and if he will make a statement on the matter. [23731/20]
View answerI recently announced a temporary enhancement to the existing HTB scheme for the remainder of 2020 as part of the July Stimulus package. The legislation to give effect to this increase has been outlined in the Financial Provisions (Covid-19) (No.2) Act 2020 and was signed into law on 1 August 2020.
In summary, the legislation provides that where applicants
(I) enter into a contract for the purchase of a new house or apartment, or
(ii) 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.
All other conditions of the original HTB scheme remains the same.
The purpose of HTB is two-fold, firstly to assist first-time buyers with the deposit they need to buy or build a new home and secondly to stimulate the growth in supply of new homes. In assisting young people to take their first steps into home-ownership, the scheme supports a fundamental social policy objective.
I assume the Deputy is referring to the advice that I received from my officials in preparing the enhanced HTB measure for the Stimulus package. Such advice related to the intent of the enhancement, its operation and its impact for first-time buyers and its estimated cost.
It is not possible to provide a reliable cost estimate of any deadweight element that might arise in connection with the enhanced scheme. This is because the circumstances of potential beneficiaries are unknown. However, I would draw the Deputy's attention to a key feature of the scheme which is designed to minimise any deadweight effect, i.e. the minimum loan to value of 70% in order for purchases to be eligible for HTB - that requirement has not changed. In addition, as the as the Deputy may be aware, in 2018 I commissioned an independent Cost benefit Analysis (CBA) of the Help to Buy incentive. The report of the CBA was published on the day of Budget 2019. The analysis found a benefit-cost ratio of 1.28. indicating a moderate positive effect for the incentive.
The Report can be found at the following link.
www.budget.gov.ie/Budgets/2019/Documents/Tax%20Expenditures%20Report%20Budget%202019.pdf
