Monday, 15 October 2012
First-time home buyers told to take €5,000 'deal of a lifetime'
THE Government is warning young couples tempted to buy a house to act now -- or lose out on a €5,000-a-year "offer of a lifetime".
In last year's Budget, Finance Minister Michael Noonan announced a mortgage interest relief deal worth as much as €5,000 a year for first-time buyer couples.
However, the deal finishes at the end of this year, and a mortgage must be drawn down by December 31 for people to avail of the offer.
In an interview with the Irish Independent, junior finance minister Brian Hayes said the deal would not be extended in December's Budget, and buyers must act before the "train will have left the station".
"This is an offer of a lifetime, it won't come again," said Mr Hayes. "All our futures are based on getting the property market going again. People need to act fast to avail of it."
There have been calls to extend the scheme as the property market stabilises, but this is being firmly ruled out. The offer made little difference in the first half of the year, with only 2,858 properties sold to first-time buyers -- almost the exact same amount as the same period last year.
However, there may be an end-of-year spike, as those who were waiting for prices to drop are forced to move or lose out on the deal. But anyone tempted to buy only has weeks to go through the mortgage process, get approval and buy a house.
First-time buyers will get up to €5,000 a year for six years in mortgage interest relief if they buy this year and Mr Noonan said his scheme was aimed at breaking the "rainy-day" mentality among the under-35s.
Mr Hayes said there was evidence of increased mortgage transactions in recent months, and urged people who may already have mortgage approval to "transact" their mortgages in the coming months to avail of the offer.
"If they don't get on it now, the train will have left the station and it will be too late to act," the Dublin South West TD said. "People should be aware that it's coming to an end, and they should buy if they can."
Mr Hayes also said the banks had a role to play in ensuring that as many people as possible get their mortgages before the deadline is up.
Mr Noonan's proposals were designed at breathing some life into the property market, targeting those who were holding off buying a house.
Mortgage interest relief will not be available for anyone who buys a house from next year, and it will be fully abolished by 2018. But for those buying their first property this year, Mr Noonan increased the amount from 15pc to 25pc.
The offer applies not just to the purchase of a house, but the "repair, development or improvement of a claimant's principal private residence".
"Even when they have a very good family income, I think the psychological effect is to save rather than invest," Mr Noonan when he unveiled the offer.
"Everybody has a rainy day mentality and I'm trying to break that."
Replying to Fianna Fail's Michael McGrath in the Dail recently, Mr Noonan also said the relief was "not confined to first-time buyers".
People who already own a property can also avail of a 15pc rate, up from 10pc, until the end of the year.