Dáil Éireann Debate, Thursday - 5 October 2023
100. Deputy Catherine Connolly asked the Minister for Finance further to Parliamentary Question No. 55 of 9 May 2023, his plans for the phasing out of the help-to-buy scheme; the details of any planned changes to the criteria of the scheme in the interim; and if he will make a statement on the matter. [42981/23]
View answerThe Help to Buy Scheme was introduced in 2017 with the purpose of assisting first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. As the Deputy is aware, in Finance Act 2022 Help to Buy was extended for a further two years to the end of 2024.
To date, the Help to Buy scheme has been a significant support for first time buyers of new homes. To 31 August 2023, some 41,570 first-time buyers, either singly or as part of a couple, have benefitted from the scheme.
I note that the Deputy has previously had concerns regarding the potential that the scheme may exacerbate housing prices. As has previously been stated, policy makers were aware at the time that the scheme was being developed that it was not without risk. Likewise they were aware that there was a danger that, against a background of constrained supply, the initiative could serve to increase prices for new homes, thus potentially undermining to some extent the affordability aspiration of the scheme. However, on all occasions when the matter was formally examined to date, concerns in this regard were not borne out by the review data.
Studies carried out by Indecon Economic consultants found that the main driver of house prices was the mismatch between supply and demand rather than the existence of the scheme. Similarly, the review by Mazars in 2022 found that there is no definitive evidence that Help-to-Buy pushed up the price of new houses. In fact, Mazars found that the prices paid for new homes by people who received the Help to Buy relief were slightly lower than new house prices in the economy in general, likely because of the €500,000 price eligibility cap.
The 2022 review recommended that a more appropriate, non-tax expenditure policy mechanism to address the market failure should be designed to replace Help to Buy. Having considered the report, in Finance Bill 2022 the then Minister for Finance proposed extending Help to Buy for a further two years in its current form. This approach was in accordance with a recommendation in the report and took account of both the cost of the scheme to date and the need for certainty in the market while awaiting the increase in new housing supply envisaged by the Government’s Housing for All strategy.
To reiterate the response to previous parliamentary questions, it remains the case that, as with any tax expenditure, the scheme will be kept under review. However, decisions regarding taxation measures are usually made in the context of the annual Budget and Finance Bill process and at the appropriate time. Such decisions also 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 and where a tax-based incentive is more efficient than a direct expenditure intervention.
I will continue to work with my Cabinet colleagues to ensure that any further interventions in the housing market are appropriately calibrated, represent the best use of scarce public resources and boost the supply of housing in both the public and private sectors.
