Dáil Éireann Debate, Wednesday - 27 January 2021
332. Deputy Fergus O'Dowd asked the Minister for Housing, Local Government and Heritage if he will address concerns raised in correspondence (details supplied) regarding the help-to-buy scheme; and if he will make a statement on the matter. [4020/21]
View answerThe Programme for Government, ‘Our Shared Future’, commits to putting affordability at the heart of the housing system, and to progress a state-backed affordable home purchase scheme to promote home ownership. To begin delivering on these commitments, Budget 2021 allocated €75 million for an affordable housing shared equity scheme.
Broadly, the objectives of an Affordable Purchase Shared Equity scheme are to (1) improve access and affordability of new homes for First Time Buyers, (2) stimulate an increase in supply by improving confidence as to the viability of future housing developments to meet increased realisable demand, and (3) support economic recovery from COVID-19 by encouraging employment in the construction and related sectors.
It is intended that the scheme will be targeted at first-time buyers who are seeking to buy a new home, but who cannot quite secure the full mortgage amount to do so at the present time. It will help them secure their own home by bridging the gap between the mortgage available to them and the price of the home that is suitable to meet their needs.
In terms of progressing any policy proposal, as a matter of course, the initial stages of consultation involve a broad consideration of the measure under consideration. Schemes are then developed informed by these considerations. Based on our initial engagements, I am confident that the detailed design of the proposed scheme, which is ongoing, can mitigate potential risks and, importantly, meet important policy objectives to support people and families to buy a new home in the immediate term and support the supply of these homes.
In relation to the UK's comparable Help to Buy Scheme, the Comptroller and Auditor General C&AG)reviewed this scheme and 2019 concluded;
- the scheme was considered to meet the twin objectives set for it to increase housing supply and home ownership levels
- the scheme delivered value for money against its own objectives
- there was a 14.5% increase of new build homes supply as a result of the scheme and
- that buyers who used the scheme have paid less than 1% more than they might have paid for a similar new-build property bought without an equity support. The C&AG noted that this estimate is significantly less than others in the public domain at that time, which ranged between 5% and 20%. The C&AG found that these estimates did not compare similar properties and so did not accurately assess any additional premium paid by those using the scheme.
- The UKs Help to Buy Scheme provides an average of 22% equity support to buyers. Of the 211,000 equity loans made to buyers in England by December 2018, half were fully redeemed in the first five years and avoided paying any interest by doing so.
The Cabinet approved the priority drafting of the Affordable Housing Bill 2020 which will provide a legislative basis for the scheme in December last. I published this Bill on 20 January 2021. Once enacted, the Bill will deliver on key commitments in the Programme for Government.
It is my intention to launch the scheme later this year and, once operational, it will target Exchequer resources to simultaneously address the key challenges of affordability and supply.
