The help-to-buy scheme for first-time homeowners is set to be extended beyond the end of this year in the upcoming Budget, Tánaiste Leo Varadkar has said.
The scheme is due to expire at the end of 2021 and Mr Varadkar’s comments follow reports on Monday that house prices have risen by 9 per cent on average over the past year.
Mr Varadkar said the increase in house prices is “unwelcome, particularly for people who are trying to buy a home for the first time or maybe want to upgrade because they have a growing family”, according to The Irish Times.
Asked if there will be an extension of help-to-buy in the Budget he replied: “Help-to-buy is there, and it’s going to remain in place for a little bit longer.
“There’ll be an announcement on Budget day on the detail of that — but it is going to remain in place.”
House price inflation
The help-to-buy scheme allows those buying or building new homes for the first time to claim relief of income tax and deposit interest retention tax (Dirt) paid over the previous four years up to a maximum of €30,000 or 10 per cent of the purchase price of the property.
Mr Varadkar added: “While some people criticise it as a measure that can cause house price inflation, I think most people will see it as a measure where people get their taxes back, and they can put that towards their deposit.”
The Tánaiste said the scheme has helped more than 20,000 people “to get that deposit together and buy their first home and I think that’s why we would intend to retain it for a little bit longer”.
It comes as a report on Monday from Daft.ie said the average price of a house is now almost €24,000 higher than it was a year ago, with the rise in prices more pronounced outside of city areas.
Mr Varadkar said a number of factors have contributed to the rise in house prices: “Because of the pandemic there have been a lot of savings and more people have a deposit than was the case before.
“We also saw a decrease in construction during the pandemic, and we’re seeing an increase in building materials.”
He also cited a greater willingness to live in rural areas in the factors driving the increase.
Mr Varadkar said the Government’s Housing for All plan offers a solution and added a “major ramp-up in investment in social housing” will provide homes for people on the housing list, freeing up properties for others to rent or buy.
