Three new schemes announced to help tackle affordability in the housing market
Minister for Housing Eoghan Murphy has announced details of three new schemes to tackle affordability in the housing market.
One of the initiatives includes a Government-backed mortgage scheme for first-time buyers struggling to obtain finance.
Under the schemes, a person or couple can borrow up to 90% of the value of a new, second-hand or self-build home to a maximum of €320,000 in the Greater Dublin area, Cork and Galway and up to €250,000 in the rest of the country.
Borrowers will pay a fixed interest rate of 2% to 2.25% for 25 to 30 years.
Income cannot exceed €50,000 for a single person or €75,000 for a couple.
Speaking on RTÉ’s Morning Ireland, Mr Murphy said the Rebuilding Ireland Home Loan scheme will take the risk out of mortgage loans because the rate will be fixed for the duration of the loan.
He said many people, who might be turned down because of the “vagaries of the interest rate market”, will be able to get loans.
Mr Murphy said: “Because we are fixing the rate at a low rate and because we are fixing it for the the lifetime of the product, that makes it more affordable, and potentially more prudent than the current rules that are there.”
More than €200 million has been set aside for the first tranche, Mr Murphy said, hopefully providing for around 1,000 loans.
He said the fundamental problem of a lack of housing is being fixed.
In addition to the loan scheme, he said, the proposals included an Affordable Purchase Scheme, allowing the State to use State land to build thousands of affordable homes.
With local authorities providing the land at reduced or no cost to facilitate affordable homes, the price of the affordable house will be discounted and the State will retain an equity share in the house, relative to the discount from the full price.
For example, a house that costs €250,000 may be made available to purchase at €200,000.
Mr Murphy said he hoped that the first of the affordable homes would be built by the end of this year and said all of the trends showed that housing figures were moving in the right direction.
He said local authorities were 8% short of their targets last year, but still built three times more homes than 2016.
He added that there were ambitious targets for local authorities to provide more housing this year.
There will also be an Affordable Rental Scheme whereby rent paid covers the cost of building the property, together with ongoing management and maintenance charges, but with a minimal profit margin included.
According to the Department of Housing this will “provide greater certainty around the rent, regardless of what is happening in the market”.
The schemes will be run by local authorities and came into effect on February 1st.