Thursday, 11 February 2021

Questions (76)

Paul Kehoe


76. Deputy Paul Kehoe asked the Minister for Finance if there are circumstances under which the 70% loan-to-value ratio of the Rebuilding Ireland home loan will be reviewed for applicants whose incomes have been affected by Covid-19 (details supplied); and if he will make a statement on the matter. [7807/21]

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Written answers (Question to Finance)

The Rebuilding Ireland Home loan is a matter for the Minister for Housing, Planning and Local Government. However, I believe the question posed and details supplied by the Deputy, in fact, relate to the Help to Buy scheme.

The Help to Buy (HTB) incentive, is a scheme 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 Ireland over the previous four years, subject to limits outlined in the legislation. Section 477C of the Taxes Consolidation Act outlines the definitions and conditions that apply to the Help to Buy scheme.

One such condition is that a qualifying first time buyer must take out a loan in an amount equal to at least 70% of either the purchase price of the property in the case of a purchased house, or the value of the property in the case of a self-build house. The valuation of a self-build is as approved by the lender as determined in accordance with the Central Bank’s macro prudential rules. These rules stipulate the valuation as being the site cost plus the cost of construction.

I appreciate the particular circumstances regarding the case detailed by the Deputy. However, the rationale behind the 70% LTV condition is that those who require a mortgage below this level are generally considered to have sufficient resources to more than meet the deposit requirements of the macro-prudential rules and thus less in need of assistance from the Exchequer. Lowering the ceiling could only increase deadweight in the scheme.

While any changes to the scheme are matters for consideration in the context of the annual Budget and Finance Bill, I have no plans at the moment to review the LTV conditions.