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First-time buyers should pay only 5% deposit up front

Q&A: Dominic Coyle

First-time buyers desperate to acquire their new home are sometimes very vulnerable to pressure and often unaware of how things should be done

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Dominic Coyle
Mon Jan 23 2017 - 16:30

If a first time buyer is looking to buy a new-build house under the Help-to-Buy scheme, do they need 5 per cent of the deposit, with the other 5 per cent provided in a rebate from Revenue to buy the house, or is the 10 per cent deposit still required upfront with Revenue providing a rebate after the house is purchased?

Ms LM, email

I can tell you what should happen, in theory, but as this scheme has only just opened to applications at the start of this month, it is too early to state categorically what happens in practice.

The situation – for those who signed contracts on or after July 19th last year but before you could start making a formal application on January 1st his year – is fairly straightforward. The homebuyer has to find the full 100 per cent deposit and this is repaid directly to them by Revenue as a rebate of income tax when their application is processed.

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However, if you sign the contract after January 1st, the process is different. This, I presume, is the position you are in. In this case, when your application is processed, the 5 per cent payment (up to a maximum of €20,000) is paid directly to the developer or builder whose details you will have to provide in your application.

In theory then, it is very simple. You pay 5 per cent of the purchase price up front as a deposit and the developer/builder gets the other 5 per cent to their bank account from Revenue.

It is very early days so I have yet to get a sense of how long the application process takes and whether developers are playing straight with the rules – or whether they are demanding the 10 per cent up front and suggesting they will refund the 5 per cent when it gets to their account.

They certainly should not be doing so and I imagine any reports that they are would be frowned upon by Revenue but first-time buyers desperate to acquire their new home are sometimes very vulnerable to pressure and often unaware of how things should be done.

Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.

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