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‘Game-changer’ First Home scheme to help bridge gap for squeezed middle home buyers

Housing Minister Darragh O’Brien targets 6,000 new homes over the next three years

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Thousands of middle-income home buyers are set to benefit from a landmark affordable housing scheme.

It is designed to bridge the gap for those whose income is too low to get them a big enough mortgage to buy their first home.

The First Home shared equity scheme is set to be rolled out from early July, with €400m funding from the Government, the Irish Independent has learned.

The three main banks have signed up to the scheme which will see the State providing an interest-free stake of up to 30pc in the home.

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It is expected to cover the purchase of 8,000 new homes over the next four years.

The high-profile measure has been subject to delay, but is now due to go live from the end of the first week in July, said Housing Minister Darragh O’Brien.

Under the scheme, the purchase of new-build homes is to be jointly funded by the State and participating mortgage lenders.

AIB, Bank of Ireland and Permanent TSB are on board for the scheme, with other lenders expected to sign up.

The flagship First Homes scheme in the Government’s Housing For All strategy will have no income limits for those who apply for it.

However, there are limits on the value of properties that will qualify for the scheme in each local authority area. The limits will be based on the median value for a new home in the area.

The new scheme is set to be welcomed by the squeezed middle, who are caught paying sky-high rents.

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These people are earning too much to qualify for social housing, but too little to
qualify for a mortgage in a property market where values are back close to Celtic Tiger peaks.

It is being launched at a time when Mr O’Brien has been coming under sustained pressure, with President Michael D Higgins recently labelling housing policy in this country a “disaster”.

Mr O’Brien said he and his officials had been working on the scheme for two years, getting clearance for it from the European Union, the European Central Bank and the Central Bank here.

“I think this scheme has the potential to be a real game-changer for that group of people who can’t buy because of the gap between the finance they have and the finance they need. It will make a difference quickly.”

He said more money than the initial €400m is likely to be put into it.

Non-bank lenders were anxious to sign up. Mr O’Brien said the scheme would encourage builders to provide more homes for first-time buyers.

“I am targeting 2,000 homes a year for the next three years under this scheme, and we could do more.”

He rejected suggestions the scheme would add to property-market inflation.

“This is €75m a year out of a €15bn mortgage market. It is a tiny percentage and it is targeted and calibrated,” Mr O’Brien said.

The First Home scheme will be headed up by former Home Building Finance Ireland executive Michael Broderick.

Typical beneficiaries of the scheme would be a couple with an income of €70,000, who want to buy a €320,000 new home.

After putting up a 10pc deposit, the most they can borrow is €277,000. This leaves a gap of €43,000.

First Home would provide this amount as equity, with no interest for the first five years.

This couple could also benefit from the State’s Help-To-Buy scheme, which usually provides tax relief of up to 20pc of the property’s value.

First Home will apply to first-time buyers, but also to divorced people and those who have been made bankrupt.


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