200 complaints against plan for first-time buyers
MORE than 200 Irish people have submitted complaints to the EU Competition Directorate over the new housing support scheme announced in the Budget for first-time buyers.
They allege that the Home Choice Loans plan is contrary to competition rules as it only applies to new homes, and is only open to people earning more than €40,000 a year.
They claim the Home Choice Loans scheme breaches State aid rules as it is effectively a bailout for builders.
Spokesman for the EU Commissions Competition Directorate, Jonathan Todd, confirmed that in excess of 200 Irish people have submitted complaints over the scheme.
The commission will now make a request for information on Home Loans Choice from the Government and on the basis of that, it will decide whether or not to open an investigation.
An adverse finding could mean money provided under the scheme would have to be refunded and the scheme radically altered, Mr Todd added.
One of those who submitted a complaint -- Kerry native Pat Murphy, who is studying for a PhD in NUI Maynooth -- said the scheme was effectively a State aid for builders.
Mr Murphy said in his complaint the main beneficiaries of the Home Choice Loans scheme would be residential developers who have built new houses and are likely to be members of the Construction Industry Federation.
The €500m scheme will be added to the national debt and "may prolong the deflation of the property bubble to the detriment of Irish society as a whole".
Other grounds for the complaint include the allegation that the sale of newly built housing will be given an advantage over second-hand housing. Competing mortgage providers will also be disadvantaged as the State will become a mortgage lender.
The funding for the scheme will be raised by the State's Housing Finance Agency with an initial €500m being raised, but this could double.
The Housing Finance Agency has an exemption from EU rules on State aid as its mandate is to fund the purchasing of housing for low-income earners.
But Mr Murphy said its exemption would not apply in the case of Home Choice Loans, where mortgages are only to be offered to those earning €40,000 or more a year.
Opponents of the scheme said it effectively turns the State into a subprime lender, as the only ones who will qualify for a Home Choice mortgage are those who have been turned down for a home loan by two banks.
But Finance Minister Brian Lenihan has rejected claims that the scheme means the State is becoming a subprime lender and has denied it is a bailout for builders.