Shared equity scheme will have 'substantially lower' interest rates than UK equivalent

Will be aimed at allowing younger people to purchase their first homes and will have no salary cap

Housing Minister Darragh O'Brien told the Oireachtas housing committee he would be bringing legislation forward in the next two to three weeks to establish the scheme. Picture: Niall Carson/PA Wire

Ireland's shared equity scheme will have "substantially lower" interest rates than a similar scheme in the UK, the housing minister has said.

Darragh O'Brien told the Oireachtas housing committee that he would be bringing legislation forward in the next two to three weeks to establish the scheme, which will see €75m of government funds allocated to allow the Government to offer equity loans of up to 30% on new-build homes under €400,000. 

The scheme will have no salary cap and will be aimed at allowing younger people to purchase their first homes.

The Irish Examiner understands that the Government's funding will be matched by the State's banks, with whom negotiations concluded in recent weeks after what sources said were "disagreements" over the interest rates to be charged on the equity portion. 

It is believed that there will be 0% charged on the first five years of the loan, rising to around 1.5% in year six, and 2.1% in year 16. After year 30, this would go up to around 2.8%, it is understood.

Sinn Féin's Eoin Ó Broin told the committee that this could add a minimum of €50,000 to the lifetime cost of a €100,000 equity portion. 

He said that it was "crucial" to understand whether the Irish scheme would be done on a compound interest basis or based on the Year One principal.

Mr O'Brien said that details were "still being worked through" and were not finalised but said the Irish scheme was different to the UK's scheme and would have "substantially lower" interest rates. 

He said that the scheme was the "first affordable scheme in decades" and said that Mr Ó Broin had criticised the scheme, sight unseen.

Sources say the proposal has been sent to the European Commission, which has not raised any concerns and it is now with the Central Bank to ensure that it does not breach its macroprudential rules.

Social Democrats TD Cian O'Callaghan asked Mr O'Brien about standards checks at emergency accommodation sites. He said that a report by housing charity Inner City Helping the Homeless was concerning in some of its findings about safety and standards in homeless accommodation.

Mr O'Brien said that he was committed to "lowering our reliance on private emergency accommodation" and that he wanted to ensure that "wraparound supports in the area of addiction and mental health" had not been adequate in some areas.

We have a way to go on this, but we have made significant progress.

Limerick county TD Richard O'Donoghue said that the Land Development Agency is "only building homes in Limerick city, not in county". 

He said that while he agreed that homeownership was a right, so too was the right to live where someone is from.

He said he was "proud to be a culchie" and did not want to live in a city, but wanted to see suitable homes built in rural areas.

Labour senator Rebecca Moynihan asked Mr O'Brien about plans for a vacant homes tax, saying that institutional investors were "holding back" apartments.

Fine Gael's Emer Higgins asked Mr O'Brien's junior minister Peter Burke about work to extend maternity leave to female councillors. She said that this would go a long way to addressing the gender imbalance in the Dáil.

Mr Burke said the issue was a priority for him and he was working to ensure the scheme was done correctly.