Minister for Housing James Browne has ruled out an increase to the €500,000 cap on the Help to Buy Scheme.
The amount first-time buyers can avail of to purchase their first home was increased in Tuesday’s Budget by €5,000, meaning they can now avail of a refund on taxes paid over the previous four years up to €35,000.
However, the scheme is only available for new builds up to a limit of €500,000, with many agents pointing out that new homes in the likes of Dublin and large urban areas.
Despite this, speaking at Budget briefing this week, Minister Browne ruled out raising the €500,000 threshold on the basis that he felt it could add to house price inflation.
“We didn’t touch the €500,000 limit because that is having to control over the overall costs of new builds,” Browne said.
“I think it is also driving productivity too, as it is making builders focus their mind in terms of how they want purchasers to be able to benefit from the Help-to-Buy scheme by keeping that house price below €500,000.”
The Wexford-based TD said he did not believe that the Help-to-Buy scheme is driving inflation.
“House prices have been increasing, but we are satisfied the scheme is not a key driver of house price increases and it is helping people get on the housing ladder who otherwise would not be able to do so,” said Minister Browne.
Figures from the Department of Finance in August revealed that 48,878 Help to Buy claims had been approved from July 1st 2020 up until July 22nd this year, supporting first-time buyers across every county in Ireland.
Almost 38,000 claims relate to the purchase of newly built homes, while almost 11,000 supported self-build projects.
Meanwhile, Finance Minister Simon Harris said the €5,000 increase in the Help to Buy Scheme will have a “negligible” impact on house price inflation.
“I think by increasing it from 30,000 to 35,000, I think that's kind of negligible in terms of where the economy is,” Mr Harris said.
The Tánaiste said the Government did not want to extend Help to Buy to second-time buyers or second-hand homes because of the potential inflationary impact on house prices.
“While the first-time buyers grant is of course about giving people some more of their own money back to help them for a deposit, it’s actually being brought in as a demand measure to get people to build more first-time homes,” Mr Harris said.
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