New figures show that just 74 applicants have benefited from the deposit interest retention tax (DIRT) refund scheme introduced in Budget 2015 which Finance Minister Michael Noonan predicted would help 9,500 people buy their first home.
“To support first-time buyers saving for their first home, I am introducing a refund for DIRT on savings used to purchase their home . . .
“As a result, first time buyers will be able to save for their first home and retain 100% of the interest that they earn on their savings,” Mr Noonan said.
The figures which cover the period to the end of September show that the scheme has, so far, helped less than 1% of those Mr Noonan predicted would benefit.
Reacting to the data provided to him by Mr Noonan, Fianna Fáil finance spokesperson, Michael McGrath said the scheme has proven to be a major flop.
“It is now clear that the scheme to provide relief from DIRT for first-time buyers has been a major disappointment.
“In fact, the outcome is an insult to the thousands of people who are struggling to buy their first home,” Mr McGrath said.
“The announcement of the scheme twelve months ago was nothing more than a gimmick to distract attention from the escalating housing crisis.
“The scheme has not even managed to live up to its very modest expectations as previous parliamentary replies indicate that upwards of 10,000 were expected to benefit. In practice only a fraction of this number have availed of the scheme.”
The relief applies to savings used by first-time buyers towards the deposit on a house bought or built between October 2014 and December 2017.
Essentially, homeowners can claim a refund on the tax the government usually takes from the interest earned on their savings.
It now appears, however, that the benefit the relief offers homeowners isn’t enough to encourage the majority of first-time buyers to claim the refund.
A total of 118 applications have been received to date, of which 31 are currently being processed.
Some 13 have been refused while 74 applicants have been refunded a combined €74,880.
Mr McGrath said the underperforming relief scheme coupled with new lending rules introduced by the Central Bank earlier this year to limit the availability of credit, and a lack of supply have put the housing market beyond the reach of many potential buyers.
“A chronic lack of supply, exorbitant interest rates, the abolition of mortgage interest relief and the new Central Bank rules on deposits have combined to make home ownership increasingly unaffordable for young people.
“These are the real issues that the government should be focused on if they genuinely want to assist first time buyers,” Mr McGrath said.
The scheme has been heavily criticised since its introduction with figures released earlier this year, which showed just 43 applicants had been refunded by mid-July, drawing the ire of consumer experts.
A spokesperson for the Department of Finance was not immediately available to comment.