The controversial Home Choice Loan scheme, introduced in last October’s budget, was set up to facilitate first-time buyers who have been turned down by the banks.
The scheme, however, has come under fire from opposition parties and been branded a “bailout” for developers and state-backed subprime lending.
With costs running at almost €300,000 – and projected to grow further in the coming year – housing minister Michael Finneran is under increasing pressure to explain how it can be justified considering only 33 applications have been made and two approvals given.
Fine Gael’s housing spokesman Terence Flanagan said the figures painted a “damning picture” of the scheme and he urged the Government to review it.
“It is clear this was nothing more than a PR stunt rather than a meaningful scheme,” he said. “If it were a serious plan, there would be more than two prospective homeowners receiving approval.”
Mr Flanagan said Freedom of Information documents previously released to Fine Gael showed that the builders’ representatives, the Construction Industry Federation, had met directly with the housing minister prior to the October budget, and had lobbied for the scheme.
“While initiatives to help first-time buyers into the property market are welcome, this scheme was unsuitable and was designed to benefit developers,” Mr Flanagan said.
“It should never have been introduced and it is clear now that it must be abandoned.”
Labour’s Ciarán Lynch said he “could not believe his ears” when he heard there had been no uptake.
“The State has spent approximately €300,000, there are four local authorities involved in the scheme and there is no purchaser. What is going on here?” he said.
Responding to the criticism the housing minister said the programme was a “temporary” measure which he was keeping under review.
Mr Finneran said he rejected any question of the Government putting people into the subprime market.
“This is totally incorrect. In fact, there is no incentive at all in the scheme, which is based on a variable rate. It is for people who have already made a decision to buy a house and who, for one reason or another, cannot get a mortgage due to the credit crunch,” he said.
Mr Finneran added that the start-up costs of €280,000 were those incurred by people who were already working for the Affordable Homes Partnership.
“The facility is now used for the processing of loans throughout the local authority system.
“In many ways, it is money well spent,” he said.