Help to Buy little help to lower income households

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Social Justice Ireland regrets the extension of the Help to Buy Scheme in Budget 2021. This Scheme was introduced to provide support for first time buyers saving for a deposit on a newly built home, thereby also stimulating activity in the construction sector.  Originally set to expire in 2019, Budget 2020 extended the Scheme to 2021, notwithstanding considerable cost overruns. 

Data available from Revenue show that the total value of approved claims as of 30 September 2020 was €310.7 million, with a further €10.2m pending. Between August 2019 and end-September 2020, the cost was €104.3 million.

The aim of the scheme was to allow first time buyers reach the 10 per cent deposit required under the Central Bank’s macroprudential rules. Up to September 2020, almost 41 per cent had a loan to value of less than 85 per cent, meaning they already had the necessary deposit.

Properties purchased with the support of the Scheme were also more likely to be more expensive, with 66.3 per cent of Scheme claimants purchasing a property for €226,000-€375,000, compared to just 31.3 per cent of all sales registered on the Residential Property Price Register (Chart 1). You can also see that properties at the lower end of the market price are the least likely to be purchased with the support of the Scheme, with just 1.76 per cent of all Help to Buy supported purchasers in this price bracket.

Chart 1: Purchase Prices, Help to Buy v PRSA (€,000)

Source: Analysis of Revenue Commissioners Help to Buy (HTB) Statistics September 30, 2020 and Property Services Regulatory Authority (PRSA) Residential Property Price Register

Help to Buy artificially stimulated the property market by providing a benefit to those who need it least. In our Budget Choices briefing, Social Justice Ireland had called for the end of this Scheme and the use of these funds to instead be diverted to homelessness prevention and long-term housing supports.