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Help-To-Buy Scheme

Dáil Éireann Debate, Wednesday - 5 July 2017

Wednesday, 5 July 2017

Ceisteanna (17)

Michael McGrath

Ceist:

17. Deputy Michael McGrath asked the Minister for Finance the status of the independent impact analysis of the help-to-buy scheme; when he plans to clarify the future of the scheme; and if he will make a statement on the matter. [31610/17]

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Freagraí ó Béal (9 píosaí cainte)

This question relates to the help-to-buy scheme. As we know, an independent impact analysis which Fianna Fail insisted on is under way. I would like the Minister to clarify when he intends to make a decision on the future of the scheme. There has been considerable speculation by Ministers and others that the scheme may be scrapped, which is causing a lot of uncertainty in the market. I look forward to hearing the Minister's comments.

As the Deputy will be aware, during the Committee Stage debate on the Finance Bill 2016 my predecessor agreed to commission an independent impact assessment of the effects of the help-to-buy scheme incentive for completion prior to budget 2018. Following a competitive tender process, Indecon Economic Consultants was appointed in April to undertake the assessment. The purpose of the project is to assess whether the policy objectives on the supply of new homes are being met, the impact, if any, the scheme is having on new and second-hand house prices and on the residential property market generally. The report is being conducted on an independent basis. Indecon has devised a methodological approach which involves the use of data from the Revenue Commissioners and other sources, conducting interviews with key stakeholders and undertaking a full analysis of the policies surrounding the scheme. In direct answer to the Deputy's question, the report is scheduled to be completed by the end of August. Once received, its contents and findings will be considered and I will decide on any appropriate action or actions to take in the context of my deliberations as part of the annual budgetary process.

The Government remains of the view that the help-to-buy incentive has the potential to increase the supply of new build homes, which is a crucial factor in addressing the problems facing the housing market generally. In that regard, it should be noted that a number of indicators point to a strengthening recovery in the housing market. For example, the latest Ulster Bank construction purchasing manager's index rose to a 15-month high in May and the index suggests housing activity has continued to expand every month since July 2013.

I reassure members of the public who may be in the process of applying for the help-to-buy incentive, or those who have applications pending, that speculation concerning its abolition will not impact negatively on their applications. I will signal well in advance any proposed change to the incentive following my consideration of the Indecon report.

The speculation is within the Government - by the Taoiseach; the Minister, Deputy Eoghan Murphy, and anonymous sources within the Government - with strong hints that the help-to-buy scheme may well not survive for very much longer. The Minister knows what our position is. The impact analysis should have been made in advance of the scheme being introduced. As it was not, we insisted on it being done immediately and it is now due to be completed by the end of August, as the Minister said. However, the position is that the speculation triggered by comments made by members of the Government has caused a huge amount of uncertainty in the property market. We have a situation where prospective first-time buyers are inevitably going to rush into the market at a time when there is a very small stock of new housing units available. This will inevitably lead to a spike in the prices of the very small number of new homes available. I want to know when the Minister is going to clarify the position to bring an end to the uncertainty. If he does have the report at the end of August, will he wait until budget time in mid-October to make an announcement, even if it is very clear from the independent report that the help-to-buy scheme is, in fact, pushing up prices?

I have outlined the Government's stance on the matter which has been reiterated by other Ministers who have commented publicly on it recently. The process is as I have outlined. If changes are due to be made to the scheme, I will signal them well in advance understanding the effect my words about the scheme might have on those who are considering using it or may already have applied. To aid the House in its consideration of the scheme, the Revenue Commissioners have shared figures with me regarding the performance of the scheme to date. It may be of interest to the Deputy and others that, in terms of the property values against which applications under the scheme have been made, just under 80% of the applications have been in respect of purchases of properties less than €375,000 and that approximately 60% of applicants have a loan-to-value ratio in excess of 85%. Therefore, there are people accessing the scheme for whom it is of help. I will be using the process I have outlined to the House and will signal well in advance changes due to be made.

The Minister has now used the phrase "well in advance" on three separate occasions. What I interpret from his comments is that he is preparing the ground for the abolition of the help-to-buy scheme, but he will give notice to prospective buyers and the market of that course of action. This matters to people. There are first-time buyers who are wondering whether they should try to buy now and definitely avail of the scheme, or if they should wait until next year when they will have saved more money in order that they will have to borrow less in order to enter the property market and buy their first home. This impacts on real people and the life-changing decisions they have to make; it is important, therefore, to bring clarity to the situation. The speculation and uncertainty were directly caused by the Government's intervention in the first place and then by the comments made in which very strong hints were given. It has been widely written about by independent commentators, for example, Davy, all of whom are making the point that it seems that the scheme is about to be brought to an end.

For one who is concerned about the effects comments could have on the housing market, the Deputy's own suggestion that the uncertainty about the scheme has been increased by me in outlining a process for which his own party looked and to which the Government agreed is not consistent. I have outlined the process which is to evaluate-----

It should have been done first.

I have outlined how it is to work and been very clear that I understand the value of the scheme. I have shared with the Deputy figures that show the help it offers to people who are looking to purchase a home. The Government's position on the matter is very clear. What I am doing is outlining a process that the Deputy sought, indicating how I will use it and recognising that the Government's position on the matter is clear and that the report generated by this process will be used to inform future policy making.

I remind Deputies of the need to try to stick to the time allowed as we ran two minutes over time on that question.

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