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Help To Buy scheme could end up costing far more than anticipated – Doherty

7 February, 2017 - by Pearse Doherty TD


Sinn Féin Finance spokesperson Pearse Doherty TD has said figures he has received show that more than two thirds of those who have successfully claimed under the Help to Buy scheme were in a position to pay the 90% deposit without the help of the scheme. He also said the fact that over 2,000 applicants had been received to date calls into serious question the projected cost of the scheme.

Deputy Doherty said:

“Sinn Fein opposed the Help to Buy scheme pointing out that the evidence for its necessity didn’t exist and that it would simply run up house prices. Unfortunately, it appears that has turned out to be the case.

“These figures on the Help to Buy are concerning on two fronts. Firstly, they show that only 30% of the successful claimants to date had a loan to value mortgage of 90% or more. So in reality, 70% of the people who have benefitted were in a position to meet the deposit requirement without the help of the scheme.

“There were 2,196 applicants in the first month of the scheme which included retrospective applications from June to December 2016. If all these applicants were successful and claimed the full €20,000 available, the scheme would have already cost €43,920,000. The Budget predicted a cost of €50m this year and €40m for the next years. Although it is early days, the signs are that this scheme could turn into a runaway cost.

“What we are looking at is a scheme where the majority of claimants don’t need it and that could spiral out of control with no overall cost cap in place. Minister Noonan has promised to keep the scheme under review. I would advise him to start his review sooner rather than later.” 

Note: Please see the PQ in question below

QUESTION NOS:  159,160,161,162

DÁIL QUESTIONS addressed to the Minister for Finance (Deputy Michael Noonan)
by Deputy Pearse Doherty,
for WRITTEN ANSWER on 07/02/2017  


 
 
* To ask the Minister for Finance the number of applications to date for the help to buy scheme as announced in budget 2017; and if he will make a statement on the matter.

- Pearse Doherty T.D.


For WRITTEN answer on Tuesday, 7 February, 2017.

* To ask the Minister for Finance the number of applications for the help to buy scheme that have been deemed valid to date; and if he will make a statement on the matter.

- Pearse Doherty T.D.


For WRITTEN answer on Tuesday, 7 February, 2017.

* To ask the Minister for Finance the number of successful or pending applications for the help to buy scheme in categories (details supplied); and the total potential cost of the scheme in each category.

- Pearse Doherty T.D.


For WRITTEN answer on Tuesday, 7 February, 2017.

* To ask the Minister for Finance the total anticipated cost of the help to buy scheme based on the applications to date; and if he will make a statement on the matter.

- Pearse Doherty T.D.


For WRITTEN answer on Tuesday, 7 February, 2017.

  
REPLY.


The Deputy may be aware that a two-stage process is employed for the Help to Buy incentive, under which individuals submit an application for the incentive to receive an indication of the level of tax relief that may be available to them, and subsequently submit a claim for a tax refund. This refund is generally payable to the contractor at the deposit stage in the case of a home purchase, or in the case of a self-build, is paid to the applicant when they have drawn down the first tranche of their mortgage.

I am advised by the Revenue Commissioners that the number of Help To Buy applications received up to Friday 3 February 2017 was:

No. of Applications

Successful applications

*Pending

2,196

432

1,764


*Pending means that the applicants either have to file an outstanding return or address a compliance issue, or the application is to be reviewed by a Revenue caseworker, or the applicant needs to finalise his or her application.

The Revenue Commissioners are encouraging prospective applicants to file any necessary returns and resolve any outstanding issues before they make their HTB application. Applicants can, of course, also use Revenue's website to carry out other requests, for example to file a Form 12 or apply for tax clearance. PAYE taxpayers can use myAccount and the bulk of the applications so far have been submitted via myAccount. Business taxpayers can use ROS   Revenue's Online Service.

Information about the loan-to-value ratios is not available when individuals submit their applications, as such figures are not usually finalised at that stage of the process. However, based on the finalised claims submitted by successful applicants, I am advised that the categorisation of claims by the requested loan-to-value ratios as of 3 February 2017 was:

Loan-to-value (LTV)

90%

85% to 90%

80% to 85%

Below 80%

(and above 70% minimum LTV)

Total (134)

40

51

23

20

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