Scrapping Help-to-Buy would be a mistake, says housing official
John O’Connor of State’s Housing Agency says such a move would be ‘very disruptive’
Scrapping the Government’s Help-to-Buy scheme would be “a mistake” and would disrupt efforts to address the housing crisis, according to the head of the State’s Housing Agency.
The scheme was established last year by former minister for housing Simon Coveney, and began handing tax rebates worth up to €20,000 to first-time buyers in January.
Latest figures from the Department of Finance show there were close to 8,000 Help-to-Buy applications in the first half of 2017, of which 5,000 were successful.
The rebates, which applied retrospectively to purchases from July 2016 on, cost the Government €28 million over the first six months of this year. The average grant claim was for €14,500.
An independent review of the scheme is currently being carried out by consultancy firm Indecon after both the current Minister for Housing Eoghan Murphy and Taoiseach Leo Varadkar expressed concerns that it may be contributing to price inflation in the housing market.
The scheme was introduced despite concerns in the Department of Finance.
‘Stick with it’
In an interview with The Irish Times, chief executive of the Housing Agency, John O’Connor, urged the Government to row back from abolishing the initiative when the review is published by the Department of Finance in the coming weeks.
“Our view is that it would be a mistake now to withdraw it. What we would advise is continue it, change it from a grant to a secondary loan, but we think it would be a mistake to stop it,” he said.
“It’s about certainty . . . When you have a plan, if you decide something, [then] stick with it. It’s very disruptive announcing things, starting and stopping them,” he added.
The Housing Agency has been at the forefront of delivering accommodation units across the State since its establishment in 2010, and as such is a leading policy influencer in the area.
Fianna Fáil’s finance spokesman Michael McGrath has accused the scheme of causing a “complete mess” in the housing market, while Sinn Féin has called for its suspension.
The initiative is favoured by estate agents, who deny it has contributed to spiralling house prices, and the Construction Industry Federation, which has described it as an “essential boost” for the sector.
Mr O’Connor argues that the Help-to-Buy scheme should instead be retained, and the grant provided to home buyers should be changed to a long-term loan, which he contends would help to regulate the number of people applying.
Just 161 social units
Meanwhile, an analysis of Department of Housing figures reveals that local authorities across the State built just 161 social housing units in the first nine months of last year, while more than 90,000 people were officially recorded as waiting for accommodation on local authority housing waiting lists.
The figure refers only to new builds and does not include other social housing solutions provided by the State’s 34 local authorities and city councils, including rentals, acquisitions and refurbishments of existing units, which brings the total closer to 6,000.
Nonetheless, it reflects the low level of direct building by local authorities, which has persisted since the crash.
The figures show that Dublin City Council, the city authority with the largest population and biggest housing crisis, built just 31 units over the nine-month period.
Of the other three Dublin authorities, only Dún Laoghaire-Rathdown fared better, building 42 units, while Fingal and South Dublin County Councils built 29 and five units respectively.
A spokesman for the Department of Housing said local authorities had effectively ceased building housing due to the economic crash and the lack of funding available. However, he said that since the end of 2015, the Government had increased funding for local authority housing, but that it would take time for the building rate to pick up.