The Help to Buy Scheme should be reviewed, the leader of the Greens has said, after a party TD said the policy may have a “link” to rising house prices.
The scheme is designed to help first-time buyers purchase a newly built house or apartment as well as once-off self-build homes.
It offers a tax rebate of up to €30,000. However, opposition parties have claimed that the scheme has an inflationary effect on house prices.
A financial stability note from the Central Bank found that average users of the scheme tend to be higher-income borrowers who purchase larger, more expensive homes.
On Thursday, Green Party TD Steven Matthews said “possibly there may be some linkage” with rising prices in some parts of the country.
He made the remarks in a debate on RTÉ radio with Sinn Féin housing spokesman Eoin Ó Broin.
Mr Ó Broin said the scheme, along with the First Home Scheme, should be phased out as it “pushes up house prices” and makes it more difficult to buy.
“That’s why 70 per cent of first-time buyers can’t buy a new home and many are forced to buy far away from where they work.”
Mr Ó Broin said Sinn Féin would replace the scheme and increase the delivery of affordable homes.
He said Help to Buy is untargeted and is “distorting the market”.
Mr Matthews said the scheme should be extended with its caps reviewed. He said the €500,000 limit on the price of the house is a “different proposition” in areas outside Dublin.
He said: “I would tie it to the shared equity scheme which places price caps on houses.”
He said he would also extend it to renters to allow them to purchase houses they are renting from landlords who wish to sell.
Mr Ó Broin argued extending the scheme to second-hand homes would further increase house prices.
Mr Matthews argued that removing the Government’s supports would “alter the market”.
Asked about Mr Matthews’ comments, Green Party leader Roderic O’Gorman said a range of schemes had been introduced to help with affordability.
He said the State needs to support families attempting to get on the property ladder.
Speaking to reporters before a Cabinet meeting on Thursday, Mr O’Gorman added: “All the schemes that the Government put forward have to be kept under constant review.”
He said he had not seen “any specific data” on the Help to Buy scheme that raises concern, but added that its impact on the wider economy should be kept under review.
Elsewhere, Mr O’Gorman said a “final agreement” had yet to be reached in relation to the land hoarding tax.
The Residential Zoned Land Tax (RZLT) is designed to be charged each year on land that is zoned suitable for residential use and has access to necessary services.
The RZLT aims to incentivise landowners to activate existing planning permissions to increase housing supply.
However, the introduction of the tax and penalties has come under doubt because of a lack of exemptions for farmers.
The Economic and Social Research Institute said it is “crucially important” that the tax is implemented “immediately”.
Mr O’Gorman said: “Engagements with the Department of Finance and the Department of Housing are ongoing.”
Asked if it will be finalised by Tuesday, he added: “It will have to be part of the budgetary package, yes.”
