Rejected by Help-to-Buy as developer is not on the list

Q&A: Dominic Coyle answers your personal finance queries

Photograph: PA wire.

Photograph: PA wire.

 

My wife and I bought a new-build house in June of this year. We qualify and have an approved Help-to-Buy claim on the system. However, a little under three weeks ago we found out that our developer has failed to qualify for the scheme.

This has obviously put us in a serious hole financially.

The developer was rejected because he had late tax returns in 2013 and 2014 but he is adamant they are now up to date. However, Revenue has said that he can’t qualify because, even though the returns are up to date, they were late at the time. He is set to appeal the decision.

We agreed to buy the house in September and eventually signed contracts in December 2016 – before we knew the developer had to be qualified. At the time all the details of the HTB scheme hadn’t been released – that we knew of anyway. We had always budgeted this money in and it seems like we are the ones being punished rather than the developer.

There are at least seven other houses in our development that I know of that are similarly affected. Do we have any route with Revenue to claim?

Mr GF, email

A. Help-to-Buy has been a very popular scheme with first-time buyers – though the continued failure of the industry to deliver enough new homes to the market means prices have been rising sharply regardless.

That has led to speculation that the scheme is, in part, fuelling rising prices and that it might be withdrawn or amended.

Department of Finance figures say there were around 8,000 Help-to-Buy applications in the first half of the year; of these 5,000 have been approved, with the average rebate coming in at €14,500.

That has cost the exchequer around €28 million so far in lost tax revenue. Because of the relative generosity of the scheme – where first-time buyers purchasing newly-built homes can claim a rebate of up to €20,000 on income tax already paid in previous years – it is understandable that fairly tight rules were put in place to govern the scheme.

For Revenue, one of the few pluses of the programme was that it would disincentivise the black market as all builders or developers operating under the programme had to be registered. In order to do so, they had to be up to date with their tax affairs.

And this is where you have unwittingly tripped up.

It is human nature that we focus on our own obligations – in this case, ensuring that we are first-time buyers, that we are purchasing a newly-built home or building one ourselves, that the property value falls within the requirements and that we have sufficient tax paid over the previous four years to qualify for a rebate. We tend to assume that the other side of the equation is similarly attentive to their obligations.

But the not-so-small print in this case makes clear that anyone thinking of applying for financial support under this scheme must ensure the developer/builder is eligible too. To assist in this regard, Revenue provides a database listing all those builders and developers who are registered under the scheme. This list, which can be found at http://iti.ms/2xCj8Ki currently contains 342 companies.

Clearly most builders are on the list and with good reason. Failure by them to register means they cannot take part in the scheme and, as a result, they will struggle to sell their developments.

The requirement for “qualified contractors” to be registered and tax compliant was known when the Finance Bill was published shortly after the budget last October. And while, not surprisingly, much media attention focused on the benefit to aspiring homeowners, The Irish Times was writing about the need to ensure developers were on the approved list from November.

I’m not surprised that you, as buyers, might have missed these details in the excitement running up to the signing of contracts for your new home but, unfortunately for you, they have been known from the start.

In this case, it appears the builder tried to get themselves sufficiently compliant but that has not worked. And, at the time the contracts were signed, the list of registered contractors would not yet have been publicly available so it’s unlikely there would have been any reason for your solicitor to raise a red flag.

This is one of the less satisfactory elements of the Help-to-Buy scheme. As eligibility had been back-dated to July, many people would have signed up without seeing the details of the legislation. And even then, people like you signed up before Revenue opened the formal application process and provided a list of qualified contractors in January. But you are still bound by the contracts you signed in relation to buying the home.

The bad news for you is that Revenue is unlikely to budge. If the contractor is not registered as compliant and qualified under the scheme, the requirements of the scheme are not met and no rebate will be given. The only prospect of relief is if the developer is successful in any appeal.

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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