While there is not a hell of a lot to kick and scream about in Budget 2017, it does at least look like austerity budgets are over (for now). The only losers in the budget are smokers with 50c going onto the price of a pack of cigarettes.

Home Buyers have waited in anticipation for the finer details of the much publicized First Time Buyers Grant following on from Minister Simon Coveney’s July 2016 announcement. The result is great news for those looking to buy a brand new home with the announcement of the Help to Buy Scheme.

So What Do First Time Buyers Get?

First time buyers buying a new home will receive a 5% tax rebate to help towards the deposit for their new home. The max allowable rebate is €20,000. You must have paid enough income tax (excluding USC and PRSI) over the previous 4 years to cover the tax rebate.

Non-First Time Buyers and those buying a new home for more than €600,000 will not qualify for the tax rebate.

Another condition of the Help to Buy Scheme is that you must take out an 80% mortgage to qualify for the tax rebate. I can only assume that this is a measure to try and limit the relief to those who need it most, i.e. those with smaller deposits. However I am not sure what fail safes there will be to stop First Time Buyers with access to bigger deposits simply taking out bigger mortgages to make sure they get the incentive. We will have to wait for the finer details on this.

Backdated for New Homes Bought Since July

The tax rebate is available to First Time Buyers who have entered into a contract to buy a home since the ministers announcement in July. For those who have bought or plan to buy a second hand home the news is not so good. They will not receive any tax rebate. In fairness to Minister, he did hint in July that the scheme would be targeted at buyers of new homes to incentivize construction. However buyers of second hand homes will no doubt be left frustrated and disappointed.

Will the Help to Buy Scheme Work?

The purpose of the scheme is to encourage new home construction, especially for starter homes, selling at under €400,000. The Construction Federation is happy with the announcement and believes it will encourage the construction of new starter homes for First Time Buyers. We will have to watch this space to see if it works.

There is another argument that the €20,000 incentive will simply inflate house prices. Again we will have to watch this space to see if this happens. Prices have already been rising before the incentive was introduced and it is restricted to new homes so I am hopeful that we will see more much needed construction of First Time Buyer starter homes over the next few years.

What do you think? Will the scheme work and get builders building desperately needed new homes for First Time Buyers?

Please let us know your thoughts in the comments below.