A quick look at the government’s proposed shared equity scheme for first time buyers

House prices to rise by up to 6% in 2021

There are a number of different views on the recent motion regarding shared equity schemes in Ireland. Basically, shared equity involves the State paying up to 30% of the cost of new homes in return for a stake in your property. 

While this will take some pressure off first-time buyers and give them more possibilities, it has also been highlighted that such a demand-side initiative in a supply-constrained market would only lead to price inflation, which is the last thing new-home buyers need.

Minister for Housing, Darragh O Brien, is sticking to his guns and reminding people that when a similar scheme was implemented in the UK it led to a 50% increase in supply and no increase in inflation, giving the sense it would only be a positive move here in Ireland.

The motion itself is part of the Government’s Affordable Housing Bill in which the Government has proposed to support the scheme with an equity pot of €150m with the State and Banks supplying up €75m each, however, this all still remains in negotiations. 

As a landlord this may lead to problems particularly around rent increases as the final say is no longer just up to you. As the Central Bank of Ireland plays a vital role around lending and big financial changes in the Irish economy, changes to their set of rules will need to be applied as those borrowing could potentially breach the cap of 3.5 times a person’s salary.  

For those first-time buyers, borrower beware comes to the fore as there is the potential of an increase in interest, if the value of your home increases so does the amount you owe back the state. 

Buying a home for the first time requires a lot of work and due diligence. It is important you do the necessary research and make sure you are 100% aware of what you are agreeing too. As always if you need any help or guidance, don’t hesitate to contact us here at the KPM Group.

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