Two thirds of homebuyers on shared equity scheme use second State program to complete sale

According to figures for the third quarter of this year, the average price of homes purchased or built using the scheme is €387,000 with the average support via the scheme standing at €66,000. File picture: PA

Two thirds of those buying homes through the Government’s shared equity scheme are having to use a second State scheme to complete the purchase.

The First Home Scheme has approved 8,399 buyers in its first three years, with 4,118 homes bought or self-built as at the end of September. It has issued over €270m to date.

Two thirds of the scheme’s users (66%) also availed of the Help to Buy Scheme, which helps towards the deposit for a new home, when they sought to buy the property.

“Again, we have the Government spending hundreds of millions of euro on subsidies that have no positive impact on fixing our housing system,” Sinn Féin’s housing spokesperson Eoin Ó Broin said.

“We have a dizzying array of subsidies introduced over the last decade aimed at improving affordability. All that money could go toward building homes that working people could afford to buy.” 

The First Home Scheme is aimed at giving support to homebuyers that could not afford it otherwise after combining their available mortgage and deposit. It can provide a maximum of 30% of the purchase price, or 20% if combined with Help to Buy, with the Government taking an equity stake in the home.

The equity share can be bought back in one payment or paid off partially. If property prices increase, the money you have to pay back will increase. Furthermore, service charges apply to the equity share after five years.

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Currently the scheme only applies to first-time buyers purchasing a new build or constructing their own home. A commitment in the Programme for Government pledged to “work with the banks to expand [it] to first-time buyers of second-hand homes”.

Ahead of the recent Budget, Taoiseach Micheál Martin ruled out implementing the measure at this time and said not everything pledged could be committed to in the first year.

Nevertheless, the First Home Scheme was allocated a further €80m in funding in last week’s Budget which the Government said would support approvals for the purchase of 2,000 homes.

According to figures for the third quarter of this year, the average price of homes purchased or built using the scheme is €387,000 with the average support via the scheme standing at €66,000. Nearly three-quarters of approvals for the scheme are spread across the Greater Dublin area and Cork.

“This Government believes in home ownership and is taking concrete steps to support home ownership,” minister for housing James Browne has said.

“The First Home Scheme has been a key part of these efforts and has proven to be a vital support for thousands of first-time buyers.” 

A report commissioned by the First Home Scheme and compiled by KPMG has said there was no evidence to suggest it was contributing to inflation.

But KPMG also found the scheme needed to be monitored to ensure it was not contributing to inflation, while housing experts such as senior lecturer at TUD, Lorcan Sirr, have also said subsidies like this do put upward pressure on the price of homes.

Furthermore, a review of the rent tax credit scheme published by the Department of Finance last week found that the hundreds of millions spent on that “seems to address the symptoms but not the root causes of the rental market crisis, i.e. lack of housing supply”.