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THE HOUSING MEASURES announced by the Government in the Budget have received a mixed reaction.
One of the main talking points was the help-to-buy scheme for first-time buyers.
When announcing details of the Budget yesterday, Finance Minister Michael Noonan said: “The scheme will provide a rebate of income tax paid over the four previous tax years up to a maximum of 5% of the purchase price of a new house up to a value of €400,000 to first time buyers of new houses.
“Pro-rata rates will apply to lower priced houses. A full rebate calculated on €400,000 will also apply to houses in excess of €400,000 and up to €600,000. No rebate will be paid on houses in excess of €600,000.”
The initiative will apply to new builds only. Noonan said it will help first-time buyers save a deposit. He said he expected the building industry to increase the supply of new affordable homes in response.
The move was welcomed by the Construction Industry Federation, which said that the scheme will help to address “the chronic lack of supply in new builds”.
However, a number of economists have warned the scheme is likely to lead to a jump in property prices as it will increase demand.
David McWilliams didn’t hold back in his Irish Independent column today, saying all the good work done to halt a second property crash was “undone in a day”.
Speaking to TheJournal.ie today, Dr John McCartney, Director of Research at Savills, said the scheme is better for developers than buyers.
There are not enough housing units to go around. First-time buyers are competing with each other. If you give them each €20,000 on the same day the likelihood is that they’re going to react by each bidding more until the €20,000 is exhausted and ultimately the price will go up and up.
“Some people will still be disappointed and the people who win the bidding war will do so at a higher price point.”
McCartney noted the Irish housing market, including social housing, is based around the private sector and, in order to increase supply, building houses needs to be worthwhile for developers.
“We do need to incentivise developers to build because at the moment it’s not worthwhile for them.”
Cutting VAT
McCartney said an alternative to the approach taken by the Government would have been to cut VAT for developers, noting the positive impact the 9% rate has had on the tourism sector.
However, he noted the “optics” of this would not be good.
At the moment the Exchequer is not making any money from new homes anyway, it’s not a big stream of income to forfeit. The problem with that – the optics of cutting VAT – is that it’s very overtly a subsidy to developers.
He added that the approach taken by the Government, although it is likely to increase house prices, is “more palatable from a political point of view”.
“It’s a pity the minority government did not feel empowered to just make the simple argument of ‘Get over yourselves, the practical reality is we need the private sector developers to build’,” and cut VAT, he said.
On Today with Seán O’Rourke, Noonan defended the scheme, saying it will help young couples who are struggling to save a deposit for a house. Noonan described the scenario faced by people trying to get onto the property ladder as “like climbing a sand hill”, saying the rent they have to pay is “a drag on their savings”.
On the same programme, a woman criticised the first-time buyers scheme, telling Noonan her price range is €120,000 to €160,000, meaning she can’t afford to buy a new build.
Noonan told her the scheme is “designed to help people like yourself put the deposit together”, but she wasn’t convinced.
The minister said the purpose of the initiative is to increase the supply of housing and if he applied it to second-hand homes it would benefit sellers rather than buyers.
Homelessness
As part of the Budget, an extra €105 million is to be allocated for the Housing Assistance Payment (HAP) scheme to deliver 15,000 tenancies. A €28 million increase will see some €100 million being spent on emergency accommodation.
McCartney said while extra funding is to be welcomed, the current housing crisis boils down to a lack of supply, noting many people are in “a really difficult situation”.
He said the increase in HAP funding is “in principle giving renters more money, but not increasing units”.
McCartney said even if people receiving social welfare payments can now pay more, they are still likely to be outbid by other people who can afford to pay more rent.
One positive from the Budget is that we will get more units built. Once builders start building they can start making working capital and will build more. Pretty quickly that becomes self-sustainable.
The Peter McVerry Trust was among the homeless charities to welcome certain aspects of the Budget, but criticise others.
In a statement, the organisation welcomed the additional €28 million allocated to provide additional emergency homeless accommodation, saying: “The new funding is recognition by Government that we need to increase the availability of suitable emergency beds for those in need and to ensure that we respond to the rising numbers in homelessness.”
It also welcomed the additional €105 million allocated towards the HAP scheme, but added: “The impact of this funding and the HAP scheme in general is being eroded because of unrestricted increases in the cost of renting and the lack of security of tenure for tenants.”
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Sure it’s just a bit of craic. Although sometimes I don’t know why people bother. Like on this site anytime Northern Ireland is even mentioned in an article you can take it as a given that the same old pointless pissing match will ensue in the comments section.
Yeah between those who support violence and those who oppose it.
Yeah but when you’re bored mention NI and watch the fun.
Stop mentioning it so.. I’m only here to see Mister Fantastic setting red thumb records every day…keep up the shite work,you’re doing awful..
It’s just another of walter mittys (rodgers) accounts.
I’ll be 74 years old in September. This website has brought so much highlight to my twilight. I feel like I’m 20 again.
Keep up the good work!
Adebayo
And here I thought theJournal.ie commenter were a representative cross section of society…
Whatever gave you that idea?
No i don’t -
Only when Richard Rodgers or KKK are on the Fascist prowl !!!!!!!!
Does it ever embarrass you that SF support is only ever strong in anonymous, online forums. All those multiple troll accounts still only count as one vote each in real life – hence 85% of people not voting for SF in the last local election!
“SF support is only ever strong in anonymous, online forums. ”
Yep, thats why they’re the only party with elected MEPS in each constituency in the country, and have between doubled and tripled their elected council representatives in the last local elections, because they only have strong support in online forums….
Doubling and tripling f**l all is still f**k all.
There’s old Buddhist legend which goes as follows: Imagine a mountain, 10 miles high, 10 miles wide. Every 10,000 years a rook sharpens his beak on the top of the mountain and flies away. When the mountain has been worn down Sinn Fein will be ready to enter government.
Will all yee stop piggybacking off my comment please -
@James: Why? It wasn’t very interesting before.
Because you lot are talking bollox
@James: Seems like a natural extension of your comment then.
On an unrelated topic – Maybe if you spent a little less time cavorting with Madam Palm and her five daughters, you’d be a little more alert.
And the highest Vote of any Political Party in the 32 Counties of Ireland too !
Mister Fantastic – your views are only fantastic – if they were only factual – they would be even more fantastic – now that’s fantastic – isn’t it ?
Ciarraioch, jesus it shows how desperate SF is now if they have to start adding the votes from two different countries. Sure let’s bring China into this while we’re at it. Oh no I guess the communist party has won again.
Why would you take the votes in another country where none of the other parties ran for an election which wasn’t held in that country? Is this how SF is planning to do our Budgets? Well yeah we f**ked up and the country is in massive debt with poor international investment and rising unemployment. But sure when you add in northern ireland it all looks amazing!
Ogra Sinn Fein paint post boxes green in Northern Ireland. They’re nearly a parody of themselves.
When you think about it – former Royail Mail post boxes painted green are a parody of themselves. And yet we still have so many of them.
Only idiots comment on a forum like the Journal.
Oh, wait…
I’m managing to comment less than I used to. So hopefully I’m becoming less idiotic!
The best comments are often by people who don’t comment regularly and who just contribute their own experience to a particular story. Pity there is no filter just for those comments!
Occasionally but always regrettably
Regrettably for those reading your comments also.
Applies to your’s aswell Mister.
Norman, I am really surprised at you writing ‘aswell’.
Draws them out Patrick.
That would explain the general poor quality of thought in comment sections, they give a platform to those with shout loudest and think least. I’m looking at supporters of one political party in particular.
How does one “shout” in the written format?
YOU TELL ME
Still can only read your nonsensical reply, no sound.So again how does one shout in the written format?
Ha.
Never
Long time reader,
First time commenting……
It beats trying to get a letter published in the IT, seems to be reserved for those who know someone on the inside judging by the frequency some names get published.
Maybe try saying something interesting next time. You never know.
@misterfantastic as I have stopped buying the IT some years ago I am not going to waste my time, prefer this platform instead.
It’s not the worst minority to be a part of
Oh yeah and most people that complete these surveys always tell the truth. They the same spoofers that say they don’t have a telly.
Obviously didn’t ask anyone here so.
Only lunatics comment online.
Sponge monkeys flogle
I never comment on anything online.
Some people just shouldn’t ….. eyes roll up lol
I sincerely doubt that “lol” you claim to have done.
If you have snapchat I’d gladly send you a lol ….
Never! Wait.
Moriarity is that you?
Empty vessel, is that you?
No it’s not. I’ll leave you guessing:):)
Yup.
Look closely at the picture. It says “RT yup”!
Well having two i’s on the keyboard would be a bit redundant.
There is no “I” in “the keyboard”
i’d never comment on these things but then I’m over 45
Also hard to post using a 2006 version of internet explorer I’d imagine.
Pity the graphic is unreadable. Ongoing issue on this app.
Yes I do, but no-one listens
I think it depends on the sites a person frequents.
Youtube is terrible for comments recently. The only people who seem to comment are those against whatever the video in question is saying. and then a handful of people defend the point leaving an endless circle or debate. Mixed into that you get some people with strong or radical views posting the same messages on every video related to that topic.
I think it’s fair to say that those responding here are not a representative sample.
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