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Coveney: Change to first-time-buyer scheme is 'sensible' but €600k threshold remains

The government has been forced to change one of its key budget proposals on foot of concerns raised by the Central Bank.

Housing Minister Simon Coveney
Housing Minister Simon Coveney
Image: Sam Boal

HOUSING MINISTER SIMON Coveney has said the change made to the much talked about first-time-buyers scheme is “sensible”.

Last night it was revealed that the Central Bank had raised concerns to the Department of Finance about the new Budget initiative.

The scheme aims to help first-time buyers save for a deposit by offering an income tax rebate of up to 5% of the value of new homes which are valued at up to €400,000. A rebate of up to €20,000 is available on new-build properties up to €600,000.

Under the initial proposal, a buyer must borrow 80% of the value of the property to avail of the new grant.

Loan-to-value 

Speaking to the media today, Coveney said the Central Bank have said the threshold of the loan-to-value of property should come down from 80% to 70%.

It’s understood that the Central Bank pushed this measure as it doesn’t want to encourage buyers to take on too much mortgage debt.

The minister said the revised measure will essentially mean that no one is overborrowing to avail of the grant

Coveny said this is only a minor change, but “sensible alteration” that Finance Minister Michael Noonan is “happy to accommodate”.

I think it is a change that is worth doing.

Despite calls from Fianna Fáil that the €600,000 threshold should be reduced, the housing minister said it has not changed in the Finance Bill that is due to be published today.

20/10/2016. Stakeholder Consultation Workshop - Re Source: Sam Boal

‘Constructive criticism’

Coveney said he is willing to listen to “constructive criticism from opposition parties”, adding “to be fair to Fianna Fáil I think they want this measure to work and if they have constructive suggestions to make, we’ll listen”.

Fianna Fáil’s housing spokesman Barry Cowen told TheJournal.ie this week that the ceiling cap of €600,000 is “off the wall” and has called for it to be reduced to €400,000.

If opposition parties’ suggestions make sense “the government will see if they can accommodate that, but at the moment the threshold is there for good reason – to ensure that people who buy a property above €400,000, but in reason, don’t fall off the cliff in terms of getting nothing in first-time-buyer supports”.

“But for the moment the proposal outlined on Budget day stands,” said the minister.

Coveney said that any further changes made to the scheme will be relatively minor.

Sinn Féin hit out at the revised first-time buyers scheme last night.

The party’s finance spokesperson Pearse Doherty said the scheme announced by the government in last week’s budget is fundamentally flawed as is Fianna Fáil’s version of this scheme.

This scheme can only drive up house prices and it should be scrapped.

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