Help-to-buy ramps up with 2,000 applications in first month

Some 2,000 first-time buyers applied to benefit from the Help-to-Buy scheme in the first month of the year, figures from Revenue show, as prospective home-buyers rushed to avail of the 5 per cent tax rebate on home purchases.

According to Revenue figures, as of lunch-time on January 30th, some 1,953 applications had been received for the scheme, but of these, 1,643 applications are awaiting finalisation. A spokeswoman for the Revenue says that this is mostly because the applications are from couples and not all information has been completed by all parties.

The application process for help-to-buy is in two stages; firstly, home buyers apply to the scheme and Revenue carries out the necessary compliance checks and validation. Once the application is finalised, and the first-time buyer has their mortgage in place and is ready to purchase a property, a claim can then be submitted. While Revenue would not indicate the number of successful claims to date under the scheme, it did say that the number was “relatively small”.

The help-to-buy scheme, introduced in October’s budget, allows first-time buyers to claim back tax paid over the previous four years of up to 5 per cent of the purchase price of a new-build property, up to a limit of €20,000. To be eligible, you must either have signed contracts on a new property as of July 19th last year or will do before the end of 2019 on properties worth less than €500,000. The scheme means that a first-time buyer of a new build, who meets the criteria, will only have to come up with a deposit of 5 per cent of the purchase price (eg, €15,000 on a property worth €300,000) as the 5 per cent rebate will be paid directly to the contractor.

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To put the figures in context, data from the Banking & Payments Federation shows that first-time buyers drew down about 2,500 mortgages in the first three months of 2016. With 2,000 applications in one month alone, it could indicate a sharp hike in activity, but it should be noted that some of these applications are related to purchases in the period from July 19th-December 31st, 2016, and not all applicants will necessarily go ahead and purchase a property.

David Browne, head of new homes with Savills Residential, says the scheme has undoubtedly led to an uptick in activity.

“What help-to-buy has done is improve sentiment – and a large part of new homes is sentiment,” he says, adding, “Since we’ve come back after Christmas, the appetite for stock has grown significantly.”

Savills is readying two developments to come to the market in February, in Adamstown, west Dublin, where 40 houses are to hit the market, and Silver Banks in Baldoyle, where the agent will have a number of one-, two- and three-bed apartments, as well as houses.

The estate agent is forecasting price growth in the new homes sector of about 8 per cent this year, but Mr Browne notes that help-to-buy is not the main driver of price growth.

“It’s natural price inflation due to demand outstripping supply as you’d see in any normal market,” he says, adding that because of the Central Bank lending rules, buyers are still restricted by their incomes, even if they can get easier access to a deposit.

“Unless they earn more money, they can’t borrow more money,”he says.

Eligible developments

Some prospective home buyers however may still be disappointed to learn that not all new-builds are as of yet eligible for the scheme. According to figures from Revenue, while 91 contractors have applied for the scheme, just 21 were approved as of January 30th. To be approved for the scheme, developers must provide evidence of tax compliance, the contractor’s VAT details, an up-to-date tax clearance certificate, details of the contractor’s address, planning and land holdings.

Developers approved for the scheme to date include Tower Homes, developers of Wicklow Hills, Newtownmountkennedy, Wicklow; Winsac, developers of Barnageeragh Cove, Skerries, Co Dublin; Durkan Residential, developers of Silken Park, Citywest, Co Dublin; and Ballymore, which is behind the Piper’s Hill development in Naas, Co Kildare.

However, a considerable number of developers with new schemes on the market either haven’t yet applied for the scheme, or haven’t had their application approved as of yet. Developers not yet on the Revenue’s approved list include Cairn Homes, developer of Parkside on Malahide Road, Dublin and Churchfields in Ashbourne, Co Meath; and Regency, developer of Scholarstown Wood, Rathfarnham.