Raising the Help to Buy threshold above €500,000 would mean “essentially wasting taxpayers’ money”, an economics professor has warned. 

The Help to Buy (HTB) scheme provides first time buyers with grants of up to €30,000 for new build properties valued at €500,000. 

Estate agent Savills Ireland has urged the Government to increase the threshold to €621,000 to reflect the significant increase in house prices since the scheme was introduced eight years ago. 

On Newstalk Breakfast, DCU Professor Edgar Morgenroth said changes to HTB will not solve Ireland’s housing crisis. 

“It’s a strange argument to say that you will increase the amount of supply by making it easier for people to buy - which is a demand side policy,” he said. 

“This will do absolutely nothing to help alleviate the problem - in fact, it will probably make it worse by raising prices. 

“So, the Help To Buy scheme, while an individual benefits from it, [they] might think that’s a great thing. 

“For the overall problem in the housing market, we need to build more; we don’t need to increase the amount of demand, which is already high.” 

New houses for sale. Picture by: Alamy.com. 

Professor Morgenroth added that most people who use HTB would be able to buy a property without help from the scheme. 

“We’re essentially wasting taxpayers’ money that we should probably use in other ways,” he lamented.

When asked what he would do to alleviate the housing crisis, Professor Morgenroth said he would urge the Government to focus on delivering more social housing units. 

“I would recommend that the Government use the land that Government or public bodies hold and build on it directly," he said. 

“Build social housing on that land and use the money there; that would help people who are never going to be able to afford to buy property in the first place. 

“They’re always going to need State support; we’ve basically thrown them into the private rented sector, competing with everyone else and that’s driving up rents. 

“So, if we took care of the people we need to take care of anyway, I think we would be much better and much faster at addressing the problem.”  

A new estate in County Kildare. Photo: Eamonn Farrell/RollingNews.ie

Savills has also urged the Government to slash stamp duty on commercial property from 2% to 7%, in a bid to lure more international investment in Ireland. 

This, Professor Morgenroth believes, would be unwise. 

“It’s supposed to increase the amount of supply,” he said. 

“But there’s a lot of vacancies but I don’t know that we need more supply in the commercial property space. 

“The argument made in the submission is that it reduces profitability - well, so does any tax. 

“But Government needs to get tax revenue and we are unique almost in Ireland being very exposed to having a lot of our tax revenue coming from just one [source].” 

Main image: For sale signs. Picture by: Colin Keegan.