New Homes: Homebuyers more incentivised than ever before

Never before in the history of the State have there been so many incentives for first-time buyers to purchase a new home, writes Conor Power

The First Home Scheme was introduced in the middle of last year but it’s only through getting the message out to people in the meantime that it has begun to make a rising impact on the market.

While successive governments since the downturn of 2007-08 have been correctly criticised for a lack of foresight and responsibility on ensuring the provision of housing for Irish citizens, there’s no doubting the current administration’s commitment when it comes to doing everything possible to assist people in getting onto the property ladder.

Never before in the history of the State have there been so many incentives for first-time buyers to purchase a new home.

The First Home Scheme was introduced in the middle of last year but it’s only through getting the message out to people in the meantime that it has begun to make a rising impact on the market. More and more people are realising that through this scheme, they are able to afford homes they might have thought were beyond their reach; homes which were, in fact, beyond their reach until the introduction of the scheme, which has been tweaked again recently.

“With the introduction of the new caps being increased, that has been another game-changer for people, I think,” says Elizabeth Hegarty, associate director of Savills New Homes.

The First Home Scheme was the Government’s shared equity scheme and when it was first introduced, there were value caps of €350,000 in Cork County and €450,000 in Cork City, limiting the application of the scheme to homes at or below those price levels.

The scheme allows for the Government to take a share in the value of a new house of up to 30%, to be paid back separately and at a very low interest rate and interest-free for the first five years. It effectively means a significant price reduction up front, allowing new home buyers a foot in the door of their own home.

“The €350,000 level was quite a difficult task for people to achieve,” says Elizabeth, “so that’s gone up now to €425,000, which is a huge change.”

 “The €350,000 limit was a bit irrelevant to the market,” says Paul Hannon, director at Sherry Fitzgerald New Homes, “so now at €425,000, the majority of the new housing stock is sitting within that and so it qualifies. And in the city, it was €450,000 and it’s now gone up to €475,000. That means that virtually all the three-bedroom houses qualify and some of the four-bedroom ones qualify as well.”

 Using a combination of all these incentives that are on offer, many first time buyers are often pleasantly surprised to find that they are in the market for homes that were beyond their reach before.

“For instance, on a €400,000 house, you’re essentially paying €370,000 with the Help-to-Buy scheme and you can get another €80,000 through the First Home Scheme,” points out Paul Hannon, director at Sherry Fitzgerald New Homes.

The First Home Scheme is managed through the official website but it is usually administered through the lenders themselves so that when a First Time Buyer is going through the process of organising their mortgage, the bank will integrate the application process for them.

“It was launched last July,” says Paul Hannon of Sherry Fitzgerald New Homes, “but it didn’t get a lot of traction then, to be honest. It wasn’t advertised very well but it’s being advertised very well now. We had a launch last recently in Glanmire and there are almost 40% of our buyers using the First Home scheme, whereas last October or November, that would have been 5%.”

With measures already in place, those in power are also under justified pressure to try something new as well as reinstating the Help-to-Buy scheme; one of the most important measures for first-time buyers and the building trade that has been introduced in recent years.

HTB Scheme is still “vital” for first-time buyers in a greener property market

First introduced in 2017, the HTB (Help-to-Buy) scheme is still another important incentive, with the vast majority of first-time buyers for new homes now using it.

“I would say that 85% of people coming to us buying new homes are availing of the Help-to-Buy scheme,” says Elizabeth Hegarty, associate director at Savills New Homes. “The First Home scheme is still in its infancy, relatively speaking. It’s only around seven or eight months and I think that the uptake on it initially was slow. That has increased a lot, particularly in the county.” 

 The level of energy efficiency is completely unrecognisable in new homes compared to what was being produced even a decade ago. Today, all new homes are A-rated under the national BER (Building Energy Rating) metric. On top of that, the Government have been slowly but surely providing incentives for owners of older homes to bring them up to the same standard or as close as possible.

All in all, it’s turning the homes of Ireland into the kinds of green homes that were the stuff of science fiction only a generation ago and the lending market has responded in kind.

Amongst the lenders in the market, there are less of the cashback offers that were so popular a few years ago and these seem to be replaced more and more with “green” mortgage rates. And in this era of rising interest rates, competitive rates are all that matter.

“Yes, all new homes would qualify for green mortgages... and it’s another perk for new home buyers,” says Elizabeth.

Green rates, it seems are here to stay.