Could uncertainty over the future of the help to buy scheme drive up house prices even more?

Could uncertainty over the future of the help to buy scheme drive up house prices even more?

New leadership often brings about new ideas and the recent elevation of Leo Varadkar to Taoiseach could have a big impact on the housing market in the months ahead.

After replacing Enda Kenny, one of the new Taoiseach’s first tasks was deciding his new Cabinet team with Eoghan Murphy replacing the man Varadkar tipped to the position, Simon Coveney, as the new Minister for Housing.

The new minister might be still adjusting to his elevated role but it is clear from the outset he has one of the biggest challenges ahead given rising house and rental costs, not to mention the ongoing issue of homelessness.

It will likely be a few weeks or months until his ideas – good, bad or indifferent – are known but one thing that could be facing the axe is the help to buy scheme which was introduced by his predecessor in last October’s Budget.

The scheme, which provides first-time buyers with grants of up to €20,000 when purchasing a newly built property, has been criticised by many as pushing up house prices without encouraging new building.

Speaking on RTÉ’s The Week in Politics last weekend, Murphy admitted he was “looking at” the scheme, saying: “We have a review under way at the moment and I will wait until that review is concluded.”

Asked whether or not he was concerned that the scheme might in fact be inflationary, Murphy replied: “It is a concern of mine.”

That has led to increased speculation that the help to buy scheme could be scrapped. What this could mean in the short term is prices for new homes being pushed up even further amid fears the incentive will be abolished.

The latest figures from the CSO showed house price inflation accelerated to 10.5% nationwide in the year to April.

As of the end of last month, Revenue had received 6,607 applications for stage one of the Help to Buy incentive with 4,095 of them approved.

There are two stages involved in the process. The initial application, stage one, where applicants provide proof of their mortgage, and stage two, the claims stage, where more details and documentary evidence of mortgage drawdown is needed.

However, it is possible that many of the applicants will never make a claim during stage two for a variety of reasons.

These could include individuals who do not go on to obtain mortgage approval or who may decide to purchase a second-hand property.

To date, 1,917 stage-two claims have been made, of which 1,376 have been approved.

We’d like to know your thoughts on the matter.

  • Do you think the help to buy scheme should be scrapped?
  • Is it a contributory factor to driving up house prices?
  • Have you benefitted or considered applying for the scheme?

Have your say below…

There are 11 comments for this article
  1. at 10:10 pm

    We offer cheap loans and financing to entrepreneurs and businesses. Our interest is 3% rate, get more details

  2. Ellen Coakley at 8:17 pm

    I feel the scheme is not a good idea the money goes to the builder not the house buyer.I feel it should be scrapped it will increase house prices and not everyone will be able to avail of it.The government should go further regarding rent control which is sometimes great than a mortgage

  3. Karl Gillis at 1:34 pm

    H2B could have been a great scheme and incentive if other factors were addressed also.
    When Demand is higher than Supply it will always drive prices up, basic economics, so whether H2B or some other incentive is in place the house prices are going to rise as long as demand is higher.
    There are no rent controls, if rent controls were to fall in line with, say ALL other Euro Zone countries, then people who are currently renting would be able to afford to save for the entire 10% deposit currently needed for the purchase of a new house. Currently when the monthly cost of rent is approximately €300-€500 more expensive than the repayments on a monthly mortgage (based on a family living in a house) how are families supposed to (a) save for a security deposit and (b) sustain the rising costs of rent.
    A lot of politicians stand to personally gain with the current state of rents so any major changes are not going to happen anytime soon.
    I am currently personally utilising the H2B scheme without which I could be another few years trying to save for the security deposit, that’s tough when trying to decide where to send the kids to school and try to avoid having to move around to other homes which are affordable.
    There isn’t an easy quick solution, but a solution is to be continuing to build houses at a quicker rate than what is currently being done. Lot’s of other in, outs and what-have-yous but more houses will address the supply and demand issue.

    • Sanchu Varkey at 2:07 pm

      Instead of giving money to buyer give that money to developer if he sells the house .Also make little strict rules to get a mortgage for buyer What is wrong in that?

      • Karl Gillis at 3:01 pm

        I understand what you’re trying to say?

        • Karl Gillis at 3:02 pm

          Sorry, I don’t understand what you are trying to say.

          • Sanchu Varkey at 3:06 pm

            At the moment Help to buy grant is given to buyer of the property. I want this money given to the builder as an incentive for completing and selling new houses.

      • Karl Gillis at 3:12 pm

        In reply to your comment below – OK, I could agree with that to some extent to get more houses built.

        However, I do think the current climate makes it very difficult for the average person to save 10% IF they are renting a property and trying to save, this goes back to my point about lack of rent controls forcing people into trying to buy a house for security etc…

        • Sanchu Varkey at 3:18 pm

          I think people needs to make some sacrifice to buy a house because it is an important milestone in one’s life. I also understand 10% saving might be difficult to save in current rental market.Also house prices should be in line with people salary(salary * 3 or 3.5 max).People should be mortgage free when they are 50 years so that they can save money for their retirement. I know I am day dreaming

  4. Sanchu Varkey at 11:14 am

    I think HTB was a very bad decision. I know a local builder increased the price from 300k to 327k shortly after HTB was announced. I may get 16000 from HTB but still I am paying 11K from my pocket extra .It was a very very bad decision in my opinion

    I am not why people say abolishing will increase the price. Houses needs to be completed and mortgage needs to be drawn before they get the money. By the time mortgage is drawn this plan will be gone for good.

Leave a Reply