Housebuilder Glenveagh looks for 'flexibility' in Central Bank mortgage loan limits

Easing strictures such as the loan-to-income cap could help many families who are now locked out of buying a home

Glenveagh CEO Stephen Garvey said that loosening rules on home loans could free up young families to enter the property market. Picture: iStock

Changes to the Central Bank mortgage rules to allow "flexibility", including loosening the loan-to-income cap could help first-time buyers locked out of buying a home during the crisis, the boss of housebuilder Glenveagh Properties has said. 

Chief executive Stephen Garvey said that, in some circumstances, allowing young couples buying their first property to borrow more than 3.5 times their gross salary, as currently permitted under the mortgage rules, could help them acquire a new home.     

The Central Bank is currently carrying out a review of its so-called macro-prudential rules which were devised as the economy recovered from the last financial crisis and came into force over five years ago to prevent any repeat of Irish banks pumping too much mortgage credit into the housing market.

Glenveagh reports strong recovery

His remarks came as Glenveagh —  a stock market listed builder — posted a pre-tax profit of €2.6m in the first six months which compared with the loss of €27.3m in the same period of 2020, when construction was badly hit by the first wave of the Covid-19 pandemic. 

It said it had recovered strongly and will deliver 1,150 homes this year. 

Glenveagh plans to ramp up to deliver 3,500 homes annually in the next few years, but helping to solve the "accommodation crisis" would involve the industry building 35,000 units a year, Mr Garvey again warned. 

He said that Gleveagh was looking to the Government to set out "a clear strategy" of the targets for different types of housing, including affordable homes and houses for rent, and to tackle the issues around planning and the pressures facing utility companies. 

New government strategy expected 

The Government is expected to lay out its key housing strategy, Housing for All, in the coming weeks.  

The average price of a Glenveagh home was €298,000 this year and compared with €300,000 last year, despite costs increasing 5%, showing it was managing costs, Mr Garvey said. 

On the mortgage rules, Mr Garvey said that delivering a house for around €280,000 "is quite a struggle".

He hoped that some initiatives such as a shared-equity scheme could help close the affordability gap in the future.

Mr Garvey said that it was too early for Glenveagh to predict the average selling price of a home for next year.