Section 477C of the Taxes Consolidation Act of 1997 provides for The Help to Buy scheme (HTB). HTB was initially announced on 19 July 2016 as part of the ‘Rebuilding Ireland: Action Plan for Housing and Homelessness’.
An increase in the supply of new housing is fundamental to resolving the current housing crisis. One of the main aims of the policy underpinning the design of HTB was to help encourage the building of additional new properties. By restricting the scheme solely to new dwellings and new self-builds, it is anticipated that the resulting increase in demand for affordable new build homes will encourage the construction of an additional supply of such properties. In accordance with a commitment in the Programme for Government, HTB was enhanced in July 2020. It is too soon to draw conclusions as to the impact of the enhancements on supply.
HTB has been the subject of two independent reviews: an impact assessment (2017), and a full Cost Benefit Analysis (2018), both carried out by Indecon Economic Consultants.
The report of the impact assessment was published as part of Budget 2018 documents and is available at the following link:
http://www.budget.gov.ie/Budgets/2018/Documents/HTB_Independent_Impact_Assessment_Sept2017.pdf
The report of the Cost Benefit Analysis was published on the day of Budget 2019, in the Department of Finance Report on Tax Expenditures, and is available at the following link:
www.budget.gov.ie/Budgets/2019/Documents/Tax%20Expenditures%20Report%20Budget%202019.pdf .
In brief, the 2018 CBA, confirmed the findings of the independent review as follows:
- Prices: While there might have been a very small increase in prices attributable to the introduction of the incentive, the primary driver of house prices remained the continued misalignment between demand and supply.
- Supply: The evidence suggested that following the introduction of the incentive there was a marked increase in supply which can be attributed in part to HTB.
- Affordability: The analysis also found that availability of HTB had reduced the time to save for all claimants and improved the overall affordability of housing for these individuals.
- Benefit/Cost Ratio: The analysis found a benefit-cost ratio of 1.28 indicating a moderate positive effect for the incentive.
Finally, in relation to impacts on house prices, to the extent that data are available at this point, Revenue advise me that for 2020 the average purchase price relating to HTB claims to December 31 2020 was €329,000 which was the same as the figure for 2019.
