Higher earners tap Help-to-Buy scheme amid soaring house price inflation
Around As Scheme The Offers Declined 2023 Of New End At Introduction Total The Under Within Revenue, Share Purchases Has Of Available Fewer Recent Since The The To Buy Years Help The €500,000 According The Claims Was Amount Dublin €938m To Cap In The Houses Scheme’s County In
Higher earners were likely to tap the Government’s Help-to-Buy scheme rather than become a typical first-time-buyer without assistance, a report by the Central Bank suggested.
The Central Bank report signalled that young homebuyers with good salaries are struggling to save enough to step on the property ladder for the first time due to soaring house price inflation in an environment of high demand and chronically low supply.
“Average house prices have increased which means the average deposit needed by perspective home buyers has also increased, making it difficult for them to get their deposit together,” said Peter Magee, director of the Irish Mortgage Advisors which represents Brokers.
It's important for first-time buyers to explore every option available to them to make sure they are not missing out on any much-needed State support, including Help-to-Buy," he said.
Mr Magee also noted that “steep rents” have become a significant obstacle for those looking to buy a home and save for a deposit.
The report found that income differential between Help-to-Buy users and other first-time-buyers tends to be fairly stable over time, while from a cross-regional perspective it tends to be higher in the rest of the State outside of Dublin and commuter belt.
Help-to-Buy accounted for around 30% of all firs-time-buyer mortgages between 2019 and 2023.
Introduced in mid-2016 and renewed until end-2025, the Help-to-Buy scheme is a tax rebate that offers a refund of the income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland during the four years preceding the Help-to-Buy application.
Under a number of qualifying criteria, borrowers can claim up to €30,000 or 10% of the home’s purchase value.
The financial regulator said the number of Help-to-Buy claims have consistently increased in recent years, with over 7,000 claims recorded in 2023 alone, even though the share of Help-to-Buy purchases has remained roughly constant between 2018 and 2023 at around 30 %.
According to Revenue, the total claims amount since the scheme’s introduction was around €938m at the end of 2023. The share of Help-to-Buy purchases in Dublin has declined in recent years as the county offers fewer new houses available within the €500,000 cap under the scheme.
Meanwhile, Ian Lawlor, managing director of Roundtower Capital which lends to developers, has called for the Help-to-Buy scheme to be extended to so-called ‘Fresh Start’ applicants.
These are people who have previously bought or built a property with, but since split from, their spouse or partner, as well as those who have sold or divested of a property as part of a personal insolvency or bankruptcy arrangement.
“These applicants are able to apply for the First Home scheme and Local Authority Affordable Purchase Scheme so it is unclear why they are currently precluded from Help to Buy,” he said.
“If Help to Buy was also open to Fresh Start applicants, it would help a lot of people to re-enter the property ladder,” he added.