The Central Bank has raised concerns the scheme could encourage people to take on too much debt
The government is facing fresh calls to scrap the Help-To-Buy scheme and give it “a proper burial.”
Finance Minister, Michael Noonan announced changes to the scheme as part of the Finance Bill released today.
Originally the scheme was only available to buyers with a mortgage amounting to 80% of the price of their new home.
As part of the changes announced today, this ‘loan to value’ ratio is being reduced from 80% to 70% - which the government hopes will allow more people to avail of the measure.
The change is reportedly in response to Central Bank concerns that the scheme could encourage people to borrow more than they actually need in order to qualify for the rebate.
Sinn Féin’s Finance Spokesperson Pearse Doherty said the scheme is “dead and gone and it should be given a proper burial.”
“It was a daft idea in the first place. We need to concentrate on where the problem is and that is in supply,” he said.
He called on the government to focus on solutions that drive down house prices to “benefit buyers in the long term and in the medium term.”
The scheme, which provides a tax rebate to first time buyers, has come under increasing attack from opposition parties since it was announced.
The rebate applies to new builds up to a maximum value of €400,000 – meaning it could be worth as much as €20,000.
First-time buyers purchasing a property worth up to €600,000 are also entitled to avail of the scheme, although the rebate will be capped at €20,000.
Deputy Doherty said the scheme is a €20,000 "gift" to people who can already afford to buy the property:
Fianna Fail has labelled the scheme a “Mansion Grant” and called for the maximum value to be set at €400,000.
Further changes to the scheme could yet be introduced as amendments when the bill reaches committee stage.