Cork TD confident Help to Buy Scheme will be retained in the Budget

A Cork-based Government TD has said he is confident that the Help to Buy Scheme, which allows first-time home-owners tax relief of up to €30,000, will be retained in next week’s budget.

Pádraig O’Sullivan, Fianna Fáil TD for Cork North-Central, said he had been making representations to Cabinet and he was confident the scheme would be retained.

The Help to Buy scheme helps first-time buyers to purchase a newly-built house or apartment, and it also applies to once-off self-build homes.

Under the scheme, first-time homeowners who buy or build a property that costs €500,000 or less may be entitled to claim a refund of income tax and DIRT that you paid over the previous four tax years.

The maximum relief available was temporarily increased in 2020, and this increase has been extended in subsequent budgets, with the increased relief currently applying until 31 December 2022.

Mr O’Sullivan said uncertainty about whether the current rate of relief would be retained had caused anxiety for first-time buyers, but he believed next week’s budget would bring good news for them.

“The Help to Buy scheme is of huge benefit to first-time buyers, giving them up to €30,000 back in their pockets, which is much-needed cash, and I would be confident that the current rate will be retained in next week’s budget,” Mr O’Sullivan told The Echo.

“I know other parties in Government were not as insistent as we were that this scheme be retained, but this is an essential part of Fianna Fáil’s Housing for All policy.

“Opposition parties like Sinn Féin have said they would do away with this initiative, but I think that would be a retrograde step,” Mr O’Sullivan said.

Sinn Féin has argued that the Help to Buy scheme has fuelled property inflation, citing a report from the Oireachtas Parliamentary Budget Office (PBO), which conducted an analysis of the scheme from its inception in 2016 to the end of 2021.

The PBO said its findings “suggest the scheme is poorly targeted" and that 63% of help-to-buy claims last year were for properties valued above the national average price.

The PBO calculated that a third of all recipients already had the 10% deposit needed for a home by examining the loan-to-value ratio of mortgages, and could then use the scheme to boost how much they had for a deposit.

"This increased the purchasing power of first-time buyers, which fuelled property inflation and created a deadweight loss," the PBO said.