2023 has been a turbulent year in terms of housing. Will Budget 2024 include effective measures to improve the housing situation in Ireland?
The budget 2024 package is €6.4 billion. Additional public spending €5.2 billion, and taxation measures €1.1 billion. Will there be changes to government grants and more aid for first time buyers? In this blog post, we summarise expected measures relating to housing from recent press releases.
Help to Buy Scheme
The Help to Buy Scheme allows first-time buyers to claim back up to €30,000 in tax might continue for another two years.
Mr O’Brien said that the current scheme house price limit of €500,000 will remain. However, he did state that the upper limit of the amount people can claim would be discussed during Budget discissions.
First Home Scheme
The First Home Scheme is currently an affordable housing scheme available to first time buyers purchasing a new property. The State and participating banks pay up to 30% of the cost of new home in return for a stake in the home. Home owners can buy back the stake at any time, but they don’t have to.
Since 2023, it includes renters who wish to purchase the property they are renting because their landlord is selling (Tennant Home Purchase Scheme). The First Home Scheme may extend to allow prospective buyers purchase second-hand homes.
Renters Tax Relief
The housing minister Darragh O’Brien, recently expressed his hope for the renters tax credit to increase from €500. The tax relief from Budget 2023 is available till 2025 and allows individual renters to claim up to €500 and €1,000 for couples.
Taoiseach Leo Varadkar has indicated there will be a mix of universal and targeted measures to help people with energy bills. Furthermore, more funds will go towards retrofitting homes. The details of how the supports will work are not yet clear; however, taking the credit directly from the energy bill is a fast efficient mechanism.
Mortgage Interest Relief
Leo Varadkar confirmed this week considerations for a form of mortgage interest relief. Mortgage interest relief was available from January 2013 to 2017. However, he stressed that the relief will prioritise people who are struggling to pay their mortgage.
The average interest rate for Irish mortgage holders rose to 4.04 per cent at the end of June. We have experienced ECB rate increases and as a result, lenders increasing their mortgage rates such as PTSB and Bank of Ireland at the end of July. Fingers crossed there will be no more interest rate increases at ECB’s meeting in September.
So, if you are considering getting a mortgage, we would advise to get your AIP quick to secure a good rate while you can! Irish rental prices are higher than ever, so now is a good time to join the property ladder.
Income-Based Tax Breaks
Darragh O’Brien is also hoping for the Budget to include income-based tax breaks. This might help to increase mortgage affordability for a lot of first and second time buyers.
Reduction on Landlord Tax
In a recent interview, Mr O Brien said that new measures should focus on reducing tax on rental income earned by landlords. He said that he was committed to “meaningful and effective measures to retain and to attract good landlords”. 84% of rental homes are currently owned by landlords who have one or two properties. Thus, a reduction of landlord tax could see fewer landlords leaving the rental market. This measure may help renters but not prospective first time buyers looking for available properties.
Unused Land Surcharge Tax
Also, the annual 3% tax on unused land will be levied in a bid to discourage developers from hoarding land. An Bord Pleanála has already dismissed an overwhelming majority of appeals for exemption from the tax from major Irish developers. Perhaps this levied surcharge may help to bring more available properties to the market in 2024.
Budget Predictions 2024 Overview
Hopefully, the government housing schemes will see improvements in Budget 2024.
Unfortunately, we do not have a crystal ball to see how the housing market will be in the next few years. However, what remains evident is that a home ownership is still cheaper than renting.
So, if you are considering getting on the property ladder we would advise that you get your AIP as soon as possible.
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