Developer offers loans to boost housing market
House building has slipped to its lowest level in the summer since 1995
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Thursday September 04 2008
A LEADING developer is attempting to kick-start the faltering housing market by offering house buyers an interest-free loan on part of the property.
The move by developer Glenkerrin Homes comes as new figures show a 71pc decline in new houses registered in August, compared with the same month last year.
House building slipped to its lowest level in the summer since 1995 as builders concentrate instead on trying to shift unsold houses.
Now developer Glenkerrin has offered to provide buyers with an interest-free loan for seven years on 15pc of the value of new houses it is selling.
The move effectively provides buyers with the equivalent of a deposit of around €60,000, according to managing director Ray Grehan of the housing building firm.
One of largest house builders in the State, Glenkerrin completes about 300 houses a year.
The new scheme will apply to around 150 homes in total, at houses and apartments in Ballintyre Hall in Dublin 14, and St Edmunds in Palmerstown in west Dublin. It also applies to apartments for sale at the Grange in Blackrock, Co Dublin.
Support schemes like this are common in Britain but Glenkerrin is the first to come up with a such a scheme in this country. Other Irish developers are understood to be planning similar moves.
Mr Grehan said buyers will own 100pc of the property, but there will be a second charge on the home.
This is likely to stop anyone who takes up the scheme from using their home as equity to buy another property and stop them using it as equity to borrow for an extension.
If the buyer sells the property before the end of the seven-year period then Glenkerrin will get 15pc of the value of the property back.
This means that if the property appreciates in value the developer will share in its capital growth. On the other hand, if the property depreciates then the developer will take a hit, the company said.
If at the end of the seven-year period the buyer does not want to sell, then he or she would pay the developer 15pc of the agreed market value of the property. Market value will be established by two leading chartered surveyors.
Mr Grehan said the support scheme was being put into operation in the absence of any Government measures to help house buyers.
There is speculation that the Government will announce a package to support the housing market in the Budget, which will now be six weeks earlier than originally planned.
- Charlie Weston Personal Finance Editor
