Housing Minister Simon Coveney is under mounting pressure from the Department of Finance to give a first-time buyers’ grant to all homes purchased — not just new builds.
Both the Department of Finance and Fianna Fáil want any new incentives, which have been promised in the budget, to extend to all those buying a home for the first time.
However, Mr Coveney is adamant that tax rebates worth up to €10,000 should only be given to first-time buyers who purchase new homes.
This view appears to be at odds with Finance Minister Michael Noonan who has concerns around limiting the lucrative tax rebate to those lucky enough to find a new home to buy.
Fianna Fáil, who will be relied on to pass the budget, are also against the measure which they say disadvantages one group of first-time buyers in favour of another.
A government source said: “Minister Coveney wants it [the rebate] to apply to new houses to encourage developers to build. The issue is a lack of supply and we want to tackle that.”
However, the senior government member added that there are “issues” with the plan from the Department of Finance’s point of view.
“It may not be possible to only attach it to new homes, it’s something that has to be looked at with the Department of Finance.”
He said the Department of Finance believes that giving an incentive or tax rebate to all first-time buyers would have the knock-on impact of encouraging development as there would be more buyers in the market and so the rebate does not have to be restricted to those purchasing new homes.
A spokesperson for Mr Coveney declined to comment on the issue and said it was a matter for Mr Noonan.
Fianna Fáil’s housing spokesman Barry Cowen last night said his party does not agree with restricting the rebate to those who buy newly built homes.
“I have discussed this with the minister, I expressed my reservations and my doubts over the rebate,” he said.
“I would seek to include second-hand homes because there is as much value in that sector as well.”
He added that Fianna Fáil would favour a different style of scheme where the State would provide grants to cover a percentage of mortgage deposits, whether they be for new or existing properties.
As budget negotiations continue, the Independent Alliance yesterday met with both Mr Noonan and Minister for Public Expenditure and Reform Paschal Donohoe during which an incentive for first-time buyers, a review of farmers’ assistance payments and the removal of prescription charges for pensioners and nursing home residents were all raised.
Separately, Fianna Fáil have asked Mr Noonan to redraft the options around changes to USC before providing their support for the budget, as it wants any cuts or widening of the bands to focus more on the lower and middle-income levels.
Meanwhile Mr Donohoe said the Government would not be able to restore public sector pay in the short term as it simply cannot afford to.
Appearing before the Oireachtas Finance Committee Mr Donohoe said: “There is €600m available to the Government and we have to balance off the needs for better services and more services... with our ability to properly pay people who are providing those services.
He said: “[We must ensure] we don’t end up with a wage bill that isn’t affordable in the future. Because when that happens then, the unfunded wage increase of tomorrow is the savage wage cut of the day afterwards.
“We have just come through that cycle and I don’t want to see that again.”
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