Limerick TD, Jan O’Sullivan, yesterday hit out at the new help-to-buy scheme that the government released last Wednesday during the 2017 budget proposal.
In an interview with the Limerick voice, the former Education Minister said that this proposal will just pit first time buyers against each other when bidding on newly built houses. She followed up by saying that this policy will just increase the price of houses, rather than appeasing the supply problem in the property market.
The new scheme will provide a rebate on income tax up to five percent of the cost of a home worth 400,000. However, this scheme will not affect houses over the value of 600,000, nor will it apply to second hand houses.
This proposal is quickly becoming one of the more controversial policies of Wednesday’s budget announcement. In a press release by the Chartered Public Accountants (CPA) Ireland, concerns were raised that this portion of the finance bill could act as discouragement to Irish people looking to return home.
Director of Membership services, CPA Ireland, David Fitzgerald, said, “This new scheme to support first time buyers will be of significant benefit to those who can avail of it, however, as it is a tax rebate, talented Irish people who were forced to emigrate during the recession will be unable to access it,” he said.
Former Senator David Norris also voiced his concern, telling the Limerick Voice that it marked a return to the inflationary politics of previous governments.
This proposal has been welcomed by the Construction Industry Federation. Tom Parlon, Director General of the CIF, told the Limerick Voice that the central issue in the housing market at the moment is a supply problem.
The former Minister of State said that this bill will act as a stimulus to the construction industry, and that making housing more affordable to first time buyers will allow banks to start giving working capital to builders again, which will act as a major stimulus to the construction industry. He described the bill as being “well thought through and well targeted”.
When asked if first time buyers would purchase first build houses, Mr Parlon said that they would “if they were available and if they could afford them”. He cited export reports that around “25,000 “ new houses are needed nationally.
Deputy Jan O’Sullivan maintains that this bill is geared more towards developers than buyers, and proposed an alternate solution. She said that the Vacant Lot Levy should be fast tracked to go through the Dail next year.
Deputy O’Sullivan’s plan would see landowners taxed on land that they own, but are not using for anything. She feels that this approach would provide a “stick rather than a carrot approach to developers” who she feels are sitting on vacant lots waiting for prices to go up before they start developing.