Dáil Éireann Debate, Thursday - 8 September 2022
536. Deputy Fergus O'Dowd asked the Minister for Housing, Local Government and Heritage if he will respond to concerns raised in respect of the first home scheme and the participation of local authorities (details supplied); and if he will make a statement on the matter. [42413/22]
Amharc ar fhreagra556. Deputy John Brady asked the Minister for Housing, Local Government and Heritage the reason that local authorities are not a participating lender on the first home shared equity scheme; if there are plans for local authorities to participate in this scheme in the near future; and if he will make a statement on the matter. [42681/22]
Amharc ar fhreagraI propose to take Questions Nos. 536 and 556 together.
The new First Home Scheme, launched on 7 July 2022, supports first-time buyers in purchasing new homes in the private market through the use of an equity share model. The Scheme uses regional price ceilings, based on the median prices of new-build homes purchased by first-time buyers, in order to temper any inflationary pressures, to target support at purchases in the lower part of the price distribution in each area, and to encourage the viability of additional housing supply at this price level. Equity support of up to 30% is available to eligible purchasers. An annual service charge applies after Year 5, calculated on the euro amount of equity support provided to enable the purchase.
The First Home Scheme is operated by a Designated Activity Company (DAC) comprising representatives of the scheme funders, including the State, AIB (which includes EBS and Haven), Bank of Ireland, and Permanent TSB. The scheme will also facilitate the inclusion of further commercial lenders in the Irish market over its lifetime.
The rules of the First Home Scheme are detailed on page 6 of the First Home Scheme brochure, and available on the First Home Scheme website at:
www.firsthomescheme.ie/media/4nda0lnn/0827-first-homes-brochure_r14.pdf
Two of the eligibility criteria of the First Home Scheme are (1) to have mortgage approval with a Participating Lender, and (2) to avail of the maximum mortgage available from one of the Participating Lenders (within the 3.5x gross income limit set by the Central Bank's macro-prudential rules).
Essentially, the First Home Scheme has been designed to support buyers in the private market for new-build homes who do have the financial capacity to obtain a mortgage from a commercial lender, but who find that the price of a suitable new home is some degree beyond their existing purchasing power.
As a distinct scheme, and subject to its own standard criteria, the Local Authority Home Loan (LAHL) is available for purchases outside of the scope of the First Home Scheme, including new and second-hand homes and new self-builds. As a separate intervention, the LAHL is targeted at typically more financially constrained households than those targeted by the First Home Scheme. Essentially, to obtain the LAHL, a purchaser must demonstrate they do not have the financial capacity to obtain a mortgage from a commercial mortgage provider in the first place.
I can confirm, however, that the LAHL can be used to buy homes which are made available under the Local Authority Affordable Purchase Scheme. It should also be noted that a first-time buyer of a new home under any State-supported scheme could also be entitled to further support from the Help to Buy tax rebate operated by Revenue.
