Property Measures Announced in the Budget
We knew in advance of Budget ’17 that housing was going to be a priority so Michael Noonan’s budget speech contained very few surprises, if any, for the sector.
In an earlier post, I detailed the Government’s Action Plan for Housing: Rebuilding Ireland. This plan sets out the housing problems to be tackled and steps that will be taken. While the issues are broken up into five categories or ‘pillars’ they all come back to one common underlying problem, that is, the chronic lack of supply across all housing sectors from social to private to rental. Developers and members of the construction industry have blamed the cost of building and budgetary measures were definitely needed to address this. Unfortunately, this is not what we got on Budget Day. Instead, we got a grant – by way of tax rebate – for first-time buyers purchasing newly built homes only.
This help-to-buy scheme for first-time buyers will give a rebate of income tax (already paid) of 5 per cent of the purchase value of a newly-built home, up to a value of €400,000. That translates to a maximum rebate of €20,000 in cash. Properties costing from €400,000 to €600,000 will qualify for the €20,000 rebate, but the scheme will not apply to homes over €600,000 in value. This is a temporary measure only, backdating to July 19th last and will run until the end of 2019. In practical terms, buyers of a new house costing €300,000 will qualify for a rebate worth €15,000, however, they will still need their €23,000 deposit (under the Central Bank rules) and they must have a combined income of €75,000.
While the rebate is designed to offset the cost of higher deposits required from first-time buyers, and in turn boost demand, it has been perceived by members of the sector as a grant to the developer. Irrespective of the designed purpose, in real terms, this is the least effective way to stimulate supply and is likely to simply increase prices for first-time buyers already struggling to afford their first home.
While the first-time buyer initiative has been deeply criticised across the industry, at least there was some attempt to address their concerns. Those stuck in rental situations were not so lucky. At best, the help-to-buy scheme will create get a small portion on renters out of this market and into their own homes, and this should free up some rented accommodation.
Other Property Measures
For specific queries or to speak with a local property expert about your buying and selling needs in Wexford, Wicklow and surrounding areas, contact myself (Michael), Alan or Eileen Kinsella at kinsellaestates.ie or email me directly on email@example.com and telephone: +353 53 94 21718
Market Updates on Thursday, October 13, 2016 in News