Making Cents: Want to buy a house? Don't lose hope

The Help to Buy (HTB) incentive helps first-time buyers purchase a house or apartment or get a self-build mortgage for a one-off home - it only applies to newly-built properties costing €500,000 or less

Tue, 11 May, 2021 - 12:00

Grainne McGuinness

It has not been a reassuring week to be a potential house buyer in Ireland. The reports of investment funds swooping in to purchase swathes of new builds and outbid individuals would make the most optimistic househunter lose hope.

Given the news, it is unsurprising first-time buyers (FTBs) despair of getting on the property market. I asked Joey Sheahan, Head of Credit, MyMortgages.ie what he was seeing in terms of market activity.

He believes investment funds have a role to play in the property market, particularly when it comes to building apartment blocks in urban areas, but agrees their activity in the current market is not kind to FTBs.

“When large funds purchase house developments generally targeted at and suited to first time buyers, challenges arise for the FTBs who must compete with these type of funds,” Mr Sheahan said. “Activity in the mortgage market has been strong of late, but there’s no doubt that many FTBs around the country are struggling to secure a home so further supports are needed in this regard.” So how can FTBs to maximise their chances of successfully bidding for a house?

“Go to your mortgage broker and get the maximum approval,” Mr Sheahan suggests. “Some banks will approve more than others for the same applicant because lending criteria vary from lender to lender.

“For example, some banks will allow more variable income than others, some banks will allow public sector employees [to] borrow based on their increased salary in two further points up the pay scale and some banks have Central Bank exemptions available meaning borrowers can potentially borrow more than 3.5 times income, maybe as high as 4.5 times.” There is broad agreement with Mr Sheahan that more needs to be done to assist FTBs but in the meantime there are a number of existing schemes house hunters should consider if struggling to buy.

The Help to Buy (HTB) incentive helps first-time buyers purchase a house or apartment or get a self-build mortgage for a one-off home. It only applies to newly-built properties costing €500,000 or less.

This scheme gives a refund of income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four tax years. To qualify buyers must take out a mortgage of at least 70% of the purchase price. Buyers who sign a contract for a new house or draw down on a self-build mortgage before 31 December 2021 can claim tax refunds of up to €30,000, or 10% of the purchase price of a property.

Another option, the Rebuilding Ireland Home Loan, is aimed at FTBs who have been refused a mortgage or received insufficient offers of finance from at least two mortgage lenders. Applicants must satisfy a number of criteria - including maximum gross income of less than €50,000 for an individual (combined gross income of less than €75,000 for a couple) and apply for the loan from their local authorities.

The maximum market value of the home to be purchased with a Rebuilding Ireland home loan is €320,000 in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow and €250,000 in other counties. FTBs can borrow up to 90% of the market value of the property.

FTBs are set to receive further help through the Affordable Purchase Shared Equity scheme in the Affordable Housing Bill 2021, which got cabinet approval this week.

“The new scheme will involve the State supporting hard pressed first time buyers to purchase homes in private developments,” Minister for Housing, Local Government and Heritage, Darragh O’Brien said. “This will take the form of an equity stake of up to 20% in new build homes.” Eligible homes will be subject to regional price caps and concerns have been raised that the caps show the scheme is unrealistic in terms of what is actually affordable for most FTBs While some people may consider the option of sitting out the market entirely for a time and waiting to buy, Mr Sheahan warns there this option carries risk too.

“I would say that if you have a housing need, you should get approval and be prepared to bid now,” he said. “No-one can say with any great degree of certainty which way the market will go but there is certainly no guarantee prices will decrease in the near future.”

Online doctor service

Boots Ireland has launched an online doctor service which will offer patients access to online consultations with a GP, or for repeat prescription ordering.

The Online Doctor Service provides GP-led appointments for non-emergency medical issues where a physical check-up may not be necessary.

Customers can also use the service to order a repeat prescription for a range of health conditions including acne, asthma, contraceptive pill and patch, cystitis, erectile dysfunction, hair loss, high cholesterol, IBS, malaria prevention, period delay, premature ejaculation, smoking cessation, strep throat infections, thrush treatment and weight loss.

The service is priced at €35 for a GP video consultation and €25 for a repeat prescription.