Government to consider an affordable housing plan that provides assistance of up to 30% of the price

DUBLIN: The government is planning to help middle-income homeless people to buy houses. The Department of Housing is considering a new affordable housing scheme that will provide up to 30% financial assistance to first-time buyers. The new plan is expected to be considered by the cabinet next week.

Minister for Housing Darragh O’Brien said he envisages a housing scheme where the government provides up to 30% of the equity to buy a new home. He said the scheme would not have any effect on the “arbitrary salary caps” currently imposed on the affordable housing plan.

The government is considering a participatory equity type arrangement. It is important that there are no arbitrary salary caps. In the case of working couples, even if they have an income of more than €75,000, they do not lose the right to the benefit. Briefly, this will not affect the maximum amount of income imposed under the current rebuilding Ireland scheme.

The government is preparing to make a partnership investment in housing, realizing the fact that thousands of people who have to live on huge rents cannot save money to buy a home. Singles and couples alike can take advantage of the scheme. Initially the scheme will consider first time buyers. In some cases, however, exemptions may be granted if there are other qualifications.

“In some instances people won’t want the full 30 per cent State equity, maybe the affordability gap is smaller so they might go for 10 per cent or 15 per cent equity,” Darragh O’Brien said.

The guidelines will be designed to facilitate varying qualifications from time to time. Legislation is expected to come before the Dáil in 2021. The project will be implemented by next June or July. The government aims to provide 2,500 houses in the next 12 months.

The new legislation will be based on the Land Development Agency. The bill will be discussed by department heads and ministers at next week’s cabinet meeting. Following preliminary approval, the rules and strategies for project implementation will be worked out with the European Commission in January. The minister explained that the bill would be fully finalized after that.

“We haven’t had an affordable scheme since the mid-2000s,” Minister said. Mr. O’Brien said a similar scheme in Britain increased supply by 50 per cent. “And it didn’t lead to any house price inflation – this one would not either,” he added.

At the same time, many economists have already come out with the view that the implementation of the government-sponsored housing scheme will lead to inflation.

But getting a 30% government stake may be beneficial for homebuyers. Government participation will provide higher assistance than the deposit required for a mortgage to buy a home.

Immigrants who come to Ireland every year in search of work are the main reason for the significant increase in house prices. Despite COVID restrictions, more than 2,000 people have arrived in the health, pharmaceutical and IT sectors in recent months alone. For such people, the new scheme is likely to be beneficial.

The preliminary outline of the plan is likely to be announced after next week’s cabinet meeting.