Another year, another largely useless budget for the property sector. Budget 2017 proved another wasted opportunity to deliver solutions, real choices and firm decisions to tackle the housing crisis bull by the horns.
So, the highly anticipated Help-To-Buy scheme was introduced providing first-time buyers with a rebate of income tax paid over the last four tax years, up to 5 per cent of the price of a new home up to the value of €400,000. So, it's constrained by house price and not income.
It's effectively a tax rebate of a maximum of €20,000 – if you've paid tax for the last four years and not if you're returning from overseas to buy a house. That's promising news for FTBs, but the budget did nothing to address a fundamental issue squeezing the market – that of the high cost of construction from securing funding to purchase sites to the raft of taxes and levies paid by developers who take the risks involved in building developments in the first place.
The scheme is also limited to new builds only, as the second hand market is fixed. That's understandable, but again, no measures were introduced to entice developers to actually build new developments. Given the mechanics of the most recent property crash, it would seem public support for developers continues to be shunned.
Then again, the question has been raised that if you offer a developer a way to reduce the build-cost of a house from €350,000 to €300,000, would they really sell it for the lower price if demand was strong enough to allow them flog it for more? Economics 101.
And to answer cries that the HTB scheme is likely to increase the market price of new homes, the answer is: who knows? It's difficult to gauge in a market in which prices are continually rising as it is.
So, what else did Budget 2017 deliver? An extension of the Home Renovation Incentive Scheme for another two years is a no-brainer. The scheme has exceeded the estimated €1 billion in works since it was first introduced three years ago, which stimulates spending, creates jobs and – because the jobs must be carried out by registered trades people – it increases compliance in the building sector.
The tax break for landlords in the guise of phased mortgage interest relief from 75 to 80 per cent next year and back to 100 per cent over the coming five years, sounds good, but in truth will not result in a huge tax saving for landlords. According to accountancy firm, TaxAssist, the actual saving for most private, single property or accidental landlords is likely to be about €77 a year. Their figure was based on a rudimentary sample of 30 clients who paid an average €3,900 in mortgage interest.
Good news for households considering taking in students, though. The Rent a Room scheme is to be increased to €14,000 per annum.
All in all, Minister Noonan kicked off his presentation by saying Budget 2017 was a prudent one. It could have been a lot more pro-active in terms of the property sector.