Record numbers of first-time buyers apply for Help to Buy

Numbers applying for tax rebate of up to €30,000 to fund deposit on new house rocket

The jump in HTB applications corresponds with a surge in mortgage approvals. Photograph: iStock

The jump in HTB applications corresponds with a surge in mortgage approvals. Photograph: iStock

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A record number of first-time buyers have applied for the Help to Buy incentive so far this year, as renters, returning emigrants and those still living at home turn to the tax rebate to assist them in buying their first home.

According to figures from the Revenue, some 16,412 applications were received from potential first-time buyers (FTBs) from January to November 2020, an increase of 31 per cent on the same period in 2019, and 73 per cent on the 11 months in 2018.

The incentive offers a rebate on taxes paid of up to €30,000, or 10 per cent of the purchase price of a property up to a ceiling of €500,000, to help fund a deposit on the purchase of a new home. The incentive is restricted to both FTBs and new homes, and it was substantially enhanced in July of this year, when the eligible amount that could be claimed back jumped from €20,000 to €30,000. This means that a FTB can now buy a new home worth € 300,000 without having to save anything for a deposit. A home worth €400,000 will only require savings of €10,000.

Figures peaked after October’s budget, when the Government announced the scheme would last until end 2021. There were 3,617 applications that month, the highest figure ever, surpassing the previous monthly high of 2,600 reached in August of this year.

The jump in HTB applications corresponds with a surge in mortgage approvals. October for example, was the busiest month for mortgage approvals since records began in 2011, with more than 3,000 FTBs approved for a mortgage that month according to figures from the Banking and Payments Federation of Ireland. This is up by 31 per cent on a year on year basis, although there is an element of catch-up in the October figures, as approvals are down by about 15 per cent in the first ten months of 2020 when compared with 2019.

Claims

The Help to Buy scheme is a two stage process. Firstly, applicants prove to the Revenue that they are eligible in the application stage, and once approved, they can then go ahead and claim the rebate once they have found and signed contracts for their new home.

There were 5,512 approvals in the first 11 months of 2020, compared with 5,933 for 2019. However, given the surge in applications coming to year-end in 2020, the number of approved applications for 2020 may yet surpass 2019. Indeed November saw the most approvals ever since the scheme was introduced in 2017, at 836, for a record high value of approvals, € 20.3 million.

There were also a record number of claims in October, of 817, followed by 800 in November, indicating the number of applicants that had gone ahead and purchased a property. This compares with claims of 600 and 593, respectively, for the same months in 2019.