The Government has so far paid out over €17.2m under the help-to-buy incentive scheme, which Fine Gael leadership hopeful Leo Varadkar says he will scrap if it is found to be pushing up house prices.
The scheme is designed to assist first-time buyers with obtaining the deposit required to purchase or self-build a new house or apartment as their residence.
The incentive provides for a refund of income tax and deposit interest retention tax (Dirt) paid over the previous four tax years to those first-time buyers. It is up to a maximum amount of €20,000, depending on the value of the property.
In order for claims to be processed, the developer or builder of the home has to be registered with Revenue under the help-to-buy scheme. There was initially a slow take-up with first-time buyers being urged to check that their builder is fully registered.
However, it has now grown in popularity and since it was introduced in last October’s budget, there have been more than 6,000 applications.
Of those, 3,621 have been approved — 1,041 last year and 2,580 so far this year. There are a further 2,463 applications pending.
As a result, 1,667 claims have been drawn down by first-time buyers who have availed of the incentive.
A breakdown of those claims paid out shows that the majority of claims (1,063) were for properties in the range of €226,000-€375,000. However, 108 of them were for homes priced at in excess of €450,000.
Finance Minister Michael Noonan said that a help-to-buy application can be approved automatically and quickly on the online system where no outstanding issues are found.
However, he said that once an application is successful, the time taken for the claim to be submitted depends on the claimant.
“If he or she has the necessary evidence, which is a signed contract, mortgage agreement, deposit details, details of the property for first-time purchasers, or, in the case of first-time self-build claimants, evidence of drawdown of the first tranche of the mortgage, the claim can be submitted,” said Mr Noonan
“However, many applicants may never proceed to make a claim. Reasons for not making a claim include: Individuals who do not go on to obtain mortgage approval; applicants may decide to purchase a second-hand property; or in situations where applicants are not able to source the new home that they desire.”
During his policy document launch this week, Mr Varadkar raised issues with the scheme, which was introduced under the encouragement of his leadership rival Simon Coveney.
“It’s already agreed by Government that it will be reviewed to see if it is inflationary,” he said. “I’m going to bring forward that review. If it finds it has driven up house prices for first-time buyers then I think it should be phased out.”
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