Fine Gael leadership frontrunner Leo Varadkar yesterday vowed to abolish the Help to Buy scheme if it proves to be inflating prices.
Announced in last year’s Budget the Help to Buy scheme came into effect in January as a means to assist first-time buyers to purchase or self-build a new house or apartment to live in as their home.
The incentive provides for a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid over the previous four tax years to first-time buyers who purchase or self-build a new property. Refunds were up to €20,000, drastically cutting the deposit rate required for first-time buyers, with 6,320 applications having been made for the scheme according to the latest figures from Revenue.
Speaking yesterday as he stepped up his bid to replace Enda Kenny as party leader and Taoiseach, current Minister for Social Protection said he would review the scheme and possibly use the income tax refund to incentivise older people to move out of larger homes.
“It’s already agreed by Government that there will be a review of the first-time buyers’ scheme to see if it’s been inflationary, I want to bring forward that review,” Mr Varadkar said.
“If that review finds it hasn’t been inflationary then it will continue. If the review finds – as some people believe – that it has driven up house prices for first-time buyers, I think it should be phased out.
“I want to use that money for something very particular which is to provide step-down housing for older people.”
The Department of Finance has commissioned Indecon Economic Consultants to review the scheme, which was due to run until the end of 2019.
A spokesman for the Construction Industry Federation told The Irish Independent it was “very concerned” at any measure which might impact on supply. It said the Help to Buy scheme had helped developers secure finance from banks as it showed there were buyers in place, and its removal could impact on output.