I’m looking to buy second-hand house. This is my first home. By any chance, will the Government announce that second-hand properties will also be part of Help to Buy for first-time buyers? Is this possible in 2024?
Mr TJ
* Help to Buy has been popular with first-time buyers and not surprisingly. Getting back tax you’ve already paid to fund your home deposit, or bring the amount of mortgage you need to borrow down to a level that the lender will sanction is an attractive proposition.
It allows people to get back up to €30,000 or 10 per cent – whichever is the lower – of the value of the home they are buying from income tax and deposit interest retention tax (Dirt) you have paid over the past four years. You cannot claim back universal social charge or PRSI payments. Up to 2020 the limits were €20,000 and 5 per cent.
On the Money: the personal finance newsletter from The Irish Times
‘There used to be queues round the block’: Staff outnumber shoppers four to one in one Grafton Street store
Winter sales: Do they still offer value in the era of year-round discounts?
Winter sales guide: From refund rights to mistakes to avoid, what you need to know before shopping
There is a limit on the value of the property you can purchase while availing of the scheme, of €500,000.
First announced in October 2016 as one of the governments’ many initiatives to kick-start the housing market, it was up and running the following year, although people were allowed to claim retrospectively for property new builds or purchases dating to July 2016.
Up to the end of October there have been 111,000 applications for the relief. Of these, almost 44,000 have led to claims.
Anyone can make an application but you can only make a claim when you have signed contracts on the purchase of a home or its construction, hence the difference in the numbers.
The number of applications this year are already 10 per cent ahead of the whole of 2022 and that’s with two months to go. Claims are down but that might reflect the extra two months, or perhaps the difficulty first-time buyers are having securing a property.
As of the end of last year, Revenue said the scheme had cost the exchequer just over €740 million, with a further €9 million in claims pending at that stage.
Every budget, ministers tend to shuffle the end date on a year and in October Minister for Finance Michael McGrath announced that the scheme would be extended to the end of 2025, by which stage it will have run for close to a decade.
Only two elements of the scheme have not changed since the outset. First, you have to be a first-time buyer. They have extended the definition of first-time buyer but you would qualify anyway on that criteria. Second has been the rule that, in order to qualify, you must purchase either a newly-built home or have one built for you.
Second-hand property
You are right to raise the issue of second-hand homes. It was one of the many ideas floated ahead of the last budget and, with the Government under increasing pressure over the shortage of accommodation, you can see why.
However, the stock of second-hand accommodation is what it is and this incentive was always designed to persuade developers to build more new homes to meet demand.
There was no mention in the budget of any proposal to extend the scheme to cover new homes, although the Minister did loosen the rules so that people using the Local Authority Affordable Purchase scheme would be eligible for Help to Buy.
The only crumb of comfort that the Minister offered was that his department “will consider across next year if any changes are required to the scheme”.
This isn’t the first time the scheme has been reviewed. But, to date, no review has ever seriously proposed extending it to cover second-hand properties. If anything, the concern has been that the funding made available through Help to Buy has only helped to inflate the price of new homes – which generally rise faster than second-hand properties – and give a helping hand to wealthier prospective homebuyers who would probably have bought a home anyway.
One thing is certain. There is no chance that the scheme will be extended to cover second-hand properties next year. Any further changes will likely be announced in next year’s budget and take effect in 2025. Even then, an extension to second-hand homes is unlikely. I certainly would not be pushing off any home purchase in the hope of such a move.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice
* This article was edited on Tuesday, December 5th, 2023
