First-time buyers received a Budget 2027 boost on Tuesday with the confirmation that they will be able to access up to €35,000 towards the deposit on their first home under the Help to Buy Scheme.
This comes after the scheme, first introduced in 2016, was increased by €5,000.
The Help to Buy Scheme provides eligible first-time buyers with a refund of Income Tax and DIRT paid over the previous four years, worth up to €35,000, or 10% of the property price – whichever is less - helping them meet the deposit required to purchase or build a new home.
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.
While there had been fears expressed that an increase could just lead to a rise in house prices, Minister for Housing James Browne said the decision to increase the scheme’s limit will not result in an "inflationary" impact on existing prices.
The minister said that this is because he has chosen not to increase the €500,000 ceiling on the price of any new build home which a Help to Buy grant can be used for.
Despite this there has been some criticism from agents over a failure to raise the ceiling in more expensive parts of the country, specifically the Greater Dublin Area (GDA). Reacting to the Budget on LinkedIn, Lisney Ireland CEO Aoife Brennan said: “The biggest disappointment to me is around the Help-to-Buy price ceiling remaining at €500k.
“An increase is needed so that first time buyers can buy the format of home they require. Currently, there are homes sitting on the market in the GDA priced at €520k to €550k and potential first time purchasers can't afford them because they are relying on the HTB scheme. Equally, developers can't sell them at €500k or below because it's not financially viable to do so and they'd make a loss. This means buyers are moving further and further out of Dublin and spending more time commuting.”
She added: “The €500k ceiling is in place a decade now and residential prices have increased 93% in that period. The ceiling needs to reflect the cost of delivering homes today and support more sustainable choices about where people live.”
The increase in the Help to Buy Scheme was among a number of housing measures outlined in Budget 2027.
Minister for Finance Simon Harris told the Dáil that €9.4 billion is being spent on building new homes this year and that housing remains a priority for the Government. This includes:
- €2.2 billion to support social housing needs of 110,000 households and investment in emergency supports for those facing homelessness
- €3 billion to fund social housing delivery including 11,250 new build social homes
- €225 million allocated to the Housing Infrastructure Investment Fund
The rent tax credit will also rise by €150 to €1,150 for single renters and to €2,300 for couples from January.
The tax-free threshold for earnings under the rent-a-room relief will also rise to €16,000 from January and will be extended to include newly installed detached auxiliary dwellings.
Separately, legislation for a new Derelict Property Tax will be included in this year's Finance Bill. The tax "will encourage property owners to redevelop their properties or sell them to someone who will," Mr Harris said. The rate of tax will be 7% and work will begin on it in January, with preliminary registers of dereliction published on 1 September next year.
The three inheritance tax thresholds have also been increased. The changes will apply to gifts and inheritances taken from October 7th.
- The Category A threshold for inheritance tax from parents to children will increase by €20,000 to €420,000
- The Category B threshold, which covers inheritances received by siblings, nieces, nephews and grandchildren, will rise by €4,000 to €44,000
- The Category C threshold, which covers all other people benefiting from a gift or inheritance, will rise by €2,000 to €22,000
You can find out more about the Help to Buy Scheme here.
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