An estate agent in Limerick offered to split the price of a new home and put the kitchen down as an “extra” so that it would qualify for the Help to Buy (HTB) scheme.
The scheme provides a refund on income tax of up to €30,000 to first-time buyers on new-build properties up to a value of €500,000.
The latest example comes as the regulatory body for estate agents confirmed it has initiated an investigation into Sherry FitzGerald over a split purchase offer reported earlier this week by The Irish Times.
The new-build unit in Limerick was a four-bedroom semidetached house in the Amharc Abhann estate on the Ennis Road of Limerick city and was built by Formation Homes.
RM Block
In emails seen by The Irish Times, the sales negotiator at GVM Auctioneers said “the purchaser ... would like the contract price to be €500k and pay the rest as ‘extras’ so that they can avail of the HTB”.
“We have helped purchasers by doing this previously,” the agent said in the email thread.
The agent went on to explain how the split could be constructed, saying “if we put the kitchen down as an ‘additional extra’ at a price of €7,500 and the base price as €500k”.
When asked about the proposal, a spokesman for Formation Homes said the discussions “were ultimately not pursued or approved by the company”.
“The fully completed property in question sold for the contracted amount of €500,000, and there were no extras,” the developer said.
GVM Auctioneers responded to say the “proposal was overruled by senior management and subsequently did not proceed”.
“GVM are carrying out a full review of the matter to ensure no such proposal arises in the future,” the auctioneer said in a statement.
This comes after The Irish Times reported earlier this week that an estate agent working for Sherry FitzGerald offered a prospective purchaser a “split” sale for a new-build home, in order for it to qualify for the HTB scheme.
The proposed split was €500,000 for the house and €25,000 for the flooring.
The Property Services Regulatory Authority (PSRA) said it had “initiated an investigation of its own volition under section 65 of the Property Services Regulation Act 2011, against this estate agent”.
Under this legislation the PRSA appoints an investigator who seeks relevant documentation and evidence from the agent and drafts a report which then goes to the board of the PRSA for a final decision.
If improper conduct has been found, a number of sanctions can be imposed, varying from a minor sanction such as a caution, or a major sanction such as the suspension of the agent’s licence or a financial penalty of up to €250,000.
Have you ever been offered a split deal in order to qualify for Help to Buy?
The Help to Buy scheme is administered by Revenue, which has said it takes “any attempt to bypass or understate the full value of a property extremely seriously”.
“Splitting payments, omitting costs or structuring arrangements to artificially remain below the threshold constitutes noncompliance,” it said in a statement to The Irish Times this week.
Failure to provide Revenue with the correct purchase value of the property, or assisting someone in making a false claim for the HTB relief, can result in large fines or possible imprisonment for the developer or estate agent.
They may also face an investigation into their tax affairs, Revenue said.
Responding to the initial story earlier this week, Tánaiste Simon Harris said it raised “important questions in relation to the oversight of the scheme”.
“It’s important that the integrity of the scheme is protected at all costs,” he told The Irish Times on Tuesday, adding he had total confidence in the Revenue Commissioners’ operation of the scheme but that it was ultimately taxpayers’ money being used.
