Labour will give first-time buyers €6,000 for new homes
State will pay €1 for every €4 in 'save to buy scheme' under Burton's plans
The Labour Party will promise to give first-time buyers €6,000 towards mortgage deposits if re-elected to government, the Sunday Independent can reveal.
The plight of young families seeking to buy their first homes is emerging as a key battleground as the general election campaign kicks into full-swing this week.
After weeks of speculation over how first-time buyers would be wooed ahead of the election, parties are now scrambling to unveil policies aimed at easing the burden of the strict Central Bank mortgage rules for young homebuyers.
Tanaiste Joan Burton is planning to unveil a 'save to buy scheme' for young home buyers struggling to save for deposits due to the Central Bank's strict mortgage rules.
The new savings account, which will be set out in the party's election manifesto, will see the State pay first-time buyers a €1 cash top-up for every €4 saved.
The State contribution will be capped at €1,200 yearly and people can enter the scheme for a maximum of five years.
Under the scheme, first-time buyers saving for a €36,000 deposit for a €290,000 home will be able to avail of the full €6,000 from the State.
Speaking at the Labour Party conference in Mullingar, Ms Burton said: "We'll establish a 'Save to Buy' scheme to give first-time buyers a helping hand. This will give them a cash top-up when saving the deposit for a home."
The top-up will only be paid when contracts for the sale of a house have been signed by all parties involved in the transaction.
The party estimates the saving scheme aimed at circumventing the rules will be taken up by an estimated 30,000 people and cost €180m.
It will also propose establishing an affordable rental scheme aimed at people whose income is too high to qualify for social housing but too low to afford rising rent prices.
"We recognise that the Central Bank guidelines are a welcome and important safeguard to prevent a reoccurrence of the catastrophic property bubble fuelled by Fianna Fail. However, the guidelines make it onerous for young families, in particular, seeking to buy a home," a senior Labour source said.
The Central Bank rules insist that a first-time buyer saves 10pc of the deposit on a home costing up to €220,000 and 20pc on the balance.
Labour will not urge the Central Bank to change its policy ahead of Governor Philip Lane's review of the strict mortgage rules due to be published in November.
Ms Burton previously expressed support for linking ability to pay rent with the Central Bank rules.
In her keynote address at her party conference, Ms Burton said Labour brought a "balance" to Government over the last five years that strengthened workers' rights in the "teeth of the worst recession we've known".
She said the party also ensured nurses, teachers, gardaí and other public servants were seen as a "vital asset to our society, not a drain on it".
The Labour Party leader will be encouraged by the latest Red C, Sunday Business Post poll which shows a 1pc gain for Labour to 10pc. Fine Gael are down one to 29pc, Fianna Fail (-2) are at 17pc, Sinn Fein are at 19pc (no change) and Independents/Others are up 2pc to 25pc.
The Tanaiste warned that the world economy remains in a "fragile state" and insisted stability is "vital".
"The worst mistake we could make now is to squander our hard-earned progress by gambling on uncertainty. With the party who caused the crash and the party who would have made it worse," she said.
She outlined a range of election policy commitments including raising the old age pension by €5 and introducing €2 per hour affordable childcare for working families.
She said the party will work towards introducing free GP care for every citizen and will also "empower people with disabilities to live as full participants in society".
Ms Burton said the public "endowment of the arts is returned many times over" and promised to double the funding for the Arts Council and Film Board over the next five years.
In a speech earlier in the day, the Tanaiste accused Sinn Fein of being "more concerned about protecting their 'good republican' friends than actually building a good republic".
Labour received a boost last night as the latest opinion poll was up one point to 10pc - its highest result in that survey since last September.