Dáil Éireann Debate, Tuesday - 22 February 2022
42. Deputy Pádraig O'Sullivan asked the Minister for Finance if consideration will be given to introducing a scheme to assist first-time buyers of homes that are not new builds, similar to the help-to-buy scheme and who cannot afford to purchase a new build; and if he will make a statement on the matter. [9690/22]
View answer227. Deputy Niamh Smyth asked the Minister for Finance if there are schemes open to persons who are not a first-time buyer (detail supplied); if he will provide further details on such a scheme; and if he will make a statement on the matter. [9150/22]
View answer235. Deputy Joe Flaherty asked the Minister for Finance if he will consider extending the current help-to-buy scheme to cover second-hand houses for those counties such as County Longford in which there are no new build houses available (details supplied). [9343/22]
View answerI propose to take Questions Nos. 42, 227 and 235 together.
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 on Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to limits outlined in the legislation. Section 477C Taxes Consolidation Act (TCA) 1997 outlines the definitions and conditions that apply to the HTB scheme.
In relation to Deputy O'Sullivan's question, an increase in the supply of new housing is fundamental to resolving the current housing crisis. The HTB scheme is specifically designed to encourage an increase in demand for new build homes in order to encourage the construction of an additional supply of such properties. A move to introduce a similar scheme for second-hand properties would not achieve this aim; on the contrary, it could serve to dilute the incentive effect required in terms of encouraging additional supply of new properties. In passing, I might note that the number of housing commencements for 2021 at over 30,700, and up from 21,686 in 2020, is very encouraging. As the Deputies may be aware, the Housing for All Strategy has as a target the construction of an average of at least 33,000 new homes per year out to 2030.
With regard to the suggestion by Deputy Flaherty that the HTB scheme be extended to second-hand properties in Longford, I refer to my point above regarding the intended incentive effect of the scheme to increase overall supply by encouraging new builds. Furthermore, it would not be possible or equitable for me to amend the scheme in favour of any particular county or region.
As the Deputies will appreciate, decisions regarding taxation measures are usually made in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. The guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures, where a tax-based incentive is more efficient than a direct expenditure intervention.
In relation to Deputy Smyth's question, matters regarding housing initiatives are, in the first instance, a matter for the Minister for Housing. However, I can confirm that the only tax-based scheme relevant in this case is HTB and it is restricted to First-Time Buyers. Section 477C of the Taxes Consolidation Act 1997 requires that applicants for the scheme must be first-time buyers. This includes circumstances where there is more than one person involved in the purchase or building of a new home. The definition of first time buyer under HTB is as follows:
" first-time purchaser' means an individual who, at the time of a claim under subsection (3) has not, either individually or jointly with any other person, previously purchased or previously built, directly or indirectly, on his or her own behalf a dwelling; "
The intention is to target the HTB scheme on those who have not had the opportunity to build up equity in another property which could be used to purchase the second or subsequent property.
Finally, and as the Deputies may be aware, I announced in my Budget 2022 address that a formal review of the scheme will take place in 2022. The review will be fundamental in nature and will inform decisions for Budget 2023 and Finance Bill 2022. Issues related to the terms of reference and a specific timeline for completion as well as the question of who will carry out the review are being considered by my Department at present and the matter is expected to be moved forward shortly.
