Dáil Éireann Debate, Tuesday - 29 April 2025
592. Deputy Ged Nash asked the Minister for Finance if he is planning to review the current loan to value rules for the various State supports for first-time buyers, to address cases similar to that of a single person (details supplied) brought to my attention; and if he will make a statement on the matter. [20081/25]
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 of Income Tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four years, subject to limits outlined in the legislation.
The level of support available to first time buyers under the HTB scheme, is whichever is the lesser of:
• €30,000; or
• 10 per cent of the purchase price of the new property; or,
• the amount of Income Tax and DIRT paid in the four years before application for the relief.
An increase in the supply of new housing remains a central and priority aim of Government policy. For this reason, HTB is specifically designed to encourage an increase in demand for new build homes in order to support the construction of an additional supply of such properties. For a property to qualify for HTB, it must be new or converted for use as a dwelling, having not previously been used as a dwelling. Additionally, the purchase value/approved valuation of the property must not exceed €500,000.
Based on the latest available data (31 March 2025), the HTB scheme has supported almost 55,000 individuals or couples to buy their own home, of which around 87 per cent of claims were for properties which did not exceed €450,000 in value.
One condition of the scheme is that a qualifying first-time purchaser (“FTP”) must take out a loan in an amount equal to at least 70 per cent of the purchase value of the property. In the case of a self-build property, the purchase value is the approved valuation of the self-build property, as approved by the lender in accordance with the Central Bank’s macro prudential rules. These rules stipulate the valuation should include the site value.
The HTB scheme, was initially intended to be limited to persons who had mortgages with a minimum Loan to Value ratio (LTV) of 80 per cent. However, Central Bank data indicated that a sizable number of first-time buyers take out a mortgage with a LTV of less than 80 per cent. As such, it was decided to amend the scheme in the subsequent Finance Bill to set the minimum LTV at 70 percent so as to ensure that first-time buyers did not feel compelled to borrow larger amounts than they would have otherwise in order to qualify for the scheme.
Individuals who are in the position of being able to avail of a mortgage at a lower LTV than 70 per cent are considered to have sufficient resources to 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 per cent for purchasers availing of HTB.
The Minister for Housing, Local Government and Heritage has primary responsibility for the terms and operation of the First Home Scheme (FHS). However, I understand that, under the terms and conditions of the FHS scheme, the maximum support for purchasers under the FHS is 30 per cent, unless the purchaser is availing of Help HTB, in which case, under the terms of the FHS, it is 20 per cent.
Finally, and as the Deputy will appreciate, decisions regarding taxation measures are made in the context of the annual Budget and Finance Bill processes, at the appropriate time, having regard to the sound management of the public finances and the impact any proposed changes would have on the broader housing market. However, I have no plans, at present, to amend the LTV requirements of HTB, either generally, or specifically in relation to its interaction with the FHS.
