What you need to know about the help-to-buy scheme for first-time buyers

Budget 2017 package aims to help people looking to buy their first home

What you need to know about the help-to-buy scheme for first-time buyers

File photo: RollingNews.ie

Supporting first-time buyers was among the headline commitments set out in the programme for partnership government earlier this year.

A new help-to-buy scheme announced today comes in the form of a rebate of income tax paid over the previous four years, worth up to 5% of a house's purchase cost.

The package will provide buyers with a maximum refund of €20,000 for newly-built properties valued at up to €400,000. 

Those who purchase homes costing between €400,000 and €600,000 will also be entitled to this rate. 

Under the rules, applicants must take out mortgages of at least 80% of the house price.

The scheme, which will run until the end of 2019, does not cover second-hand or buy-to-let properties.

It will also only be open to buyers who have signed contracts to purchase their home on or after July 19th, 2016.

In the case of a self-build, applicants who drew down the first tranche of their mortgage on or after that date will be eligible as well.

An online facility on the Revenue website allowing people to see how much of rebate they could be entitled to is expected to be available from January 2017.

The move has received mixed reaction so far from construction industry representatives, with some questioning whether it will have any impact on the housing crisis. 

The Society of Chartered Surveyors Ireland warned that the problem is one of supply rather than demand.

The organisation said the government should have focused instead on measures that would help stabilise house prices and offer a better return to the taxpayer.

VAT should be reduced on affordable housing, while public land ought to be made available for affordable housing schemes, it said. 

However, the Construction Industry Federation welcomed the scheme as a significant step towards solving the housing crisis.

"There is an acute shortage of activity in this sector because first-time buyers cannot secure mortgages," it said. 

"As a result, banks won’t provide finance to home-builders making the building of new starter homes unviable. 

"This measure aims to stimulate some supply in this demographic to target realisable demand."