Dáil Éireann Debate, Tuesday - 21 November 2023
171. Deputy Brian Leddin asked the Minister for Finance if his attention has been drawn to the disparity with the help-to-buy scheme (details supplied); if the scheme will be reviewed to address this; and if he will make a statement on the matter. [50789/23]
View answerThe 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 paid in the State over the previous four years, subject to limits outlined in the legislation. Section 477C of the Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to the scheme.
HTB will only apply where a mortgage is taken out to purchase or build a home and where the value of the qualifying loan is a minimum of 70% of the ‘purchase value’ of a purchased new build or 70% of the approved valuation of a self-build.
Since 11 October 2023, in the case of a property purchased from a local authority under the Local Authority Affordable Purchase scheme, the HTB loan to value ratio is calculated using the market value of the property.
HTB was originally intended to be limited to individuals who were taking out mortgages with at least 80% LTV. However, a decision was taken to reduce the LTV to a minimum of 70% to ensure that first-time buyers do not feel compelled to borrow larger amounts in order to qualify.
The rationale for not reducing it further is that those who are in the position of being able to avail of a mortgage at a lower LTV are 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 LTV ceiling would therefore only increase dead-weight in the scheme. In fact, the independent review of the scheme which took place in 2022 recommended that the LTV be increased to 80% for purchasers availing of HTB.
The policy position remains that purchasers taking out a mortgage of less than a 70% LTV will not be able to qualify under the HTB incentive.
