Young couples who can’t save for a mortgage because of the cost of rent should be given some relief in how much they need to save for a deposit, a new Fianna Fáil plan proposes.
The party is calling on the Central Bank to amend its current rules which requires prospective homeowners to have a deposit of up to 20% of the value of the house.
The plan would see the deposit requirement reduce by a quarter where a track record of paying rent can be proven.
Speaking to the Irish Examiner, the party’s Finance spokesman Michael McGrath said that the Central Bank rules on mortgage lending, in place since February of last year, need to be reviewed to examine the impact they are having on the ability of young couples and individuals to purchase their first home.
The Cork South-Central TD is calling for the rules to be modified in order that an established track record of paying rent is taken as evidence of ability to service a mortgage.
He said: “Many young couples are caught in the vicious circle of not being able to save for a deposit because of the cost of rent. They face never being able to afford to buy their own home. That is not acceptable and this is a modest proposal to try and start a debate on this issue.
“I am suggesting that the Central Bank examines the potential of allowing up to 25% of the deposit requirement for a first-time buyer be met by taking in to account rent payments over the previous three years. This could potentially open up home ownership to a considerable cohort of people who have proven their ability to meet a monthly mortgage but are effectively shut out of the market at present because of the deposit rules,” Mr McGrath said.
He added that a survey carried out by Daft.ie last September found that it was cheaper to rent rather than to buy in 43 out of 54 areas covered by the survey. This means that, in up to 80% of the country, individuals and couples would actually be financially better off on a monthly basis paying a mortgage than paying rent for an equivalent property, he said.
Meanwhile, his party leader attacked Taoiseach Enda Kenny for expressing his desire to see a US-style income tax system introduced here.
Micheál Martin said that such a system would lead to the evisceration of public services which he could never stand over.
He denied this stance meant Fianna Fáil is a high tax party. “We are a fair tax party,” he told reporters at Leinster House yesterday.
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