Dáil Éireann Debate, Tuesday - 26 July 2022
631. Deputy Kathleen Funchion asked the Minister for Housing, Local Government and Heritage the rationale used to develop the first home buyer's scheme; the facts and figures that informed the policy; if inflation was taken into consideration; and if he will make a statement on the matter. [39848/22]
View answerThe Affordable Housing Act 2021 established the basis for a range of new affordable housing measures, including Local Authority Affordable Purchase, the First Home Scheme, the Cost Rental tenure, and the expansion of the Part V planning requirement. Taken together, these measures deliver on the Programme for Government commitment to put affordability at the heart of the housing system and prioritise the increased supply of affordable homes.
The Government's Housing for All strategy commits to the delivery of 54,000 new affordable homes in the period out to 2030, of which 36,000 will be for affordable purchase, and 18,000 will be for Cost Rental. Both of the two new Affordable Purchase schemes under Housing For All - Local Authority Affordable Purchase and the First Home Scheme - support households that, because of current income levels, are unable to secure a mortgage to meet the cost of purchasing a newly constructed home.
The First Home Scheme, launched on 7 July 2022, supports first-time buyers in purchasing new-build homes in private developments through an equity share model, similar to that employed in Local Authority Affordable Purchase. The equity share will 'bridge the gap' between the financial means available to the purchaser, comprising mortgage and deposit, and the cost of a new home within a set regional price ceiling. The scheme is being operated by a dedicated body, the First Home Scheme Ireland Designated Activity Company. Full details of the scheme are available on the website at: firsthomescheme.ie.
The rationale behind the First Home Scheme is primarily two-fold: (1) to help hard-pressed first-time buyers achieve the stability and security of home ownership at price points they can afford, and (2) to encourage increased housing supply by addressing concerns about the economic viability of developing suitable homes for first-time buyers, particularly in urban centres.
In considering the approach to be taken in relation to price ceilings my Department reviewed the approach taken by comparable schemes in other countries. This included for example the design and implementation of the ‘Help to Buy’ shared equity scheme in England and Wales. In addition, my Department has engaged with other Government Departments, particularly the Department of Finance, with State agencies such as the Housing Agency, with the banking sector via the Banking and Payments Federation of Ireland, and with the European Commission.
In order to minimise any inflationary pressures, whilst at the same time providing for the development of new build homes, the First Home Scheme utilises regional price ceilings set with reference to the median prices paid by first-time buyers for new homes in each local authority area. This ensures that the Scheme is targeted at purchases in the lower part of the price distribution of the first-time buyer market, delivering support where it is needed most. The setting of the initial price ceilings has been informed primarily by an analysis of published CSO data, specifically the Residential Property Price Index. This process also included a review of current market data including the sales prices for new homes on the market. Full details of the price ceilings for the Scheme are available on the First Home website.
The First Home Scheme Ireland DAC is now responsible for the review and updating of these price ceilings. First Home has confirmed that a review of ceilings will be undertaken after 6 months and periodically thereafter. This is to ensure that the ceilings allow the Scheme to deliver on its underlying objectives, taking account of any relevant changes in market conditions.
