Reprieve for ‘Help-to-Buy’ scheme on cards after backing.
Moves by Housing Minister Eoghan Murphy to scrap the ‘Help-to-Buy’ scheme may be in doubt after the State-backed lender charged with ramping up house building endorsed the policy.
It provides tax breaks of up to €20,000 for first-time home buyers.
Last year’s loosening of Central Bank mortgage rules and the launch of Help-to-Buy gave builders the confidence to push ahead with larger construction projects, according to Activate Capital, a joint venture between the Irish Strategic Investment Fund (ISIF) and private equity firm KKR.
“The pick-up in home-building activity during 2017 has been very significant. It is evident the changes to the Central Bank’s macro prudential regulations, together with the Help-to-Buy scheme, provided the necessary impetus to the market and generated the confidence for increasingly large phased housing construction,” Activate stated in an investor update sent to shareholders ISIF and KKR.
Mr Murphy is known to have reservations about Help-to-Buy, which was introduced by his predecessor Simon Coveney.
The new minister commissioned an independent review of the scheme by consultancy firm Indecon over concerns it was contributing to rampant house price rises.
However, Activate has been identified as an important part of the Government’s response to the housing crisis, and its views are likely to carry considerable weight.
Given the scale of the housing crisis, policy makers will be especially wary of any policy shift that reverses the current increase in building activity.
ISIF and Activate have in effect been tasked with delivering housing through funding of developers and by encouraging other finance houses to lend – for example, Activate can lend to buy land that banks will then provide funds to build on.
Controversially, while political leaders have emphasised the requirement for affordable homes, Activate has been accused of helping drive up land prices by providing financing for Cairn Homes’s market-topping €107m acquisition of part of RTÉ’s Donnybrook campus in Dublin, which is to be developed as luxury apartments.
In its update to investors, Activate said it has made more than €560m of debt available to builders and provided nearly €300m of loans for site acquisition and working capital.
The fund is currently backing 22 developments that will deliver more than 3,600 homes, the majority targeting first-time buyers.
Meanwhile, Mr Murphy’s hope that the Government’s ‘fast-track’ planning application system for large-scale housing developments would speed up the delivery of new homes has been dealt an early blow.
An examination by the Irish Independent of the pre-planning requests received by An Bord Pleanála to date shows that at least five applications for developments with as many as 2,254 housing units have been declared invalid. While most of those applicants have since submitted amended requests to An Bord Pleanála, the delays are understood to be a source of huge frustration for those affected.
Among the proposals declared invalid was an application from developer Michael Cotter’s Viscount Securities to build 934 new homes at Clay Farm in Leopardstown, Dublin 18.
Having been announced by the then housing minister Mr Coveney last November, fast-tracking was signed into law only on June 23 by his successor, Mr Murphy.