Government’s €400m scheme for first-time buyers set to open

Coalition believes First Home scheme will fund up to 8,000 homes over four years

First-time buyers who cannot afford newly built homes or apartments can from today apply for the Government’s €400 million shared equity scheme.

Minister for Housing Darragh O’Brien is to announce the First Home scheme, which the Coalition believes will fund up to 8,000 homes over four years, on Thursday. The scheme will be open to buyers of newly built houses and apartments in private developments anywhere in Ireland.

The scheme will provide part of the purchase price to buyers to add to their mortgage and deposit and applications will be taken immediately. The State will pay up to 30 per cent of the cost of the new home in return for an equivalent stake in the property, with the intention that this can be paid down at some future date.

It is understood that buyers will have the option, but not the obligation, to buy out some or all of the First Home scheme equity stake at any time if they wish and have the resources to do so. A small servicing fee will be payable on the equity after year six. Under a similar scheme in the UK, the majority of purchasers buy out the equity stake early on in the term, a Government source said.

The scheme would, the source said, be “carefully targeted and calibrated with price caps for houses ranging from €250,000 to €450,000, depending on where you are in the country”. It is understood there will be increased caps for apartments in recognition of viability issues with such properties.

Applicants will have to borrow the maximum mortgage amount available to them and the scheme will be open to customers of AIB, including their EBS and Haven mortgage businesses, Bank of Ireland and Permanent TSB. Other mortgage providers may join up in the coming months.

The €400 million figure is split 50:50 between an investment from the State and the participating banks. Sinn Féin has been critical of the scheme, which it said may push up house prices. The party has previously tabled motions for the scheme to be scrapped.

In a motion brought in the Dáil earlier this year, Sinn Féin housing spokesman Eoin Ó Broin said “Government policies, including the Help to Buy and the First Home Affordable Purchase Shared Equity schemes, have and will continue to inflate house prices”.

Jennifer Bray

Jennifer Bray

Jennifer Bray is a Political Correspondent with The Irish Times