The prospect of owning property seems elusive for many young adults. However, government officials assured on Wednesday that there are initiatives available to assist these young purchasers. “Numerous programmes are in place to facilitate home ownership. It’s crucial for our younger generation to be aware of them – the lack of awareness is disconcerting; numerous assistive schemes exist,” Taoiseach Simon Harris conveyed in a press briefing about Housing for All, a government plan.
There has been a noticeable ageing trend in home purchasers in Ireland, as per figures provided by the Central Statistics Office, with the mean age climbing from 35 in 2010 to 39 in 2021.
Harris points to the First Home Scheme and the Help to Buy grant as the most prominent steps taken by the government to alleviate affordability issues for potential homeowners.
Housing Minister Darragh O’Brien conveyed that the schemes serve as viable options for those in rental accommodation or those still residing with their parents, in response to inquiries about the challenges faced by younger individuals in their pursuit of homeownership.
So, what are these schemes, how effective are they, and how exactly does the government plan to cater to the needs of younger buyers and individuals under the age of 40?
First Home Scheme (FHS)
The FHS is designed to support first-time buyers in managing the difference in the cost of a new property and their mortgage; this scheme involves both the State and cooperative banks financing up to 30% cost of a newly constructed property, in turn gaining a property share.
Residential properties of prices up to €475,000 and flats worth up to €500,000 qualify for the scheme based on their geographical location. Data reveals that 809 approvals and 262 home purchases were achieved through the scheme in the opening 12 weeks of this year. The Coalition has now pledged an extra €40 million to the scheme.
O’Brien revealed that 40% of those benefitting from the assistance provided by FHS are single. The eligibility parameters for the scheme were expanded in early 2023 following a widening of criteria for homes in 30 out of the 31 local authority areas in Ireland, permitting an increase in the price cap for eligible properties by up to €75,000.
Help to Buy Scheme
The Help to Buy scheme was utilised by approximately 40,000 individuals, as declared by government officials on Wednesday. During the first quarter of this year, the scheme was taken advantage of by around 2,000 people, according to the data. The scheme enables individuals to recover up to €30,000 or 10% (whichever is the lesser) of their home cost from the income tax and deposit interest retention tax (Dirt) they paid over the last four years.
The Help to Buy has faced criticism, however. A study commissioned by the Department of Finance suggested that the scheme is misdirected, focusing on income, locale, housing costs, and other socio-economic elements. Critics primarily argue the scheme helps those who could buy a house independently.
The Taoiseach also referred to the regulations surrounding Rent Pressure Zones (RPZs), claiming they allow people to reduce their monthly rent and save up for a house deposit.
RPZ regulations stipulate that in locations with high rent, landlords can only increase the rent by 2% annually. However, despite this, many are experiencing a consistent increase in rental prices, as a result of ongoing market pressure.
Statistical data reveals that nearly 30% of new state-wide rents in last year’s third quarter were exceeding €2,000 monthly. This figure rose to more than half in Dublin.
Mary Lou McDonald, the leader of Sinn Féin, claimed that in 2022, about 6,000 houses nationwide were bought by so-called “vulture funds”. Earlier this year, a statement by Mr O’Brien shared his frustration upon witnessing most houses in a new estate near Dublin Airport bought by Ryanair to rent to their crew members.
The Government is planning to amend the planning laws in order to prevent such purchases from happening in the future, but critics suggest these measures do not go far enough.
On Wednesday, Mr O’Brien clarified the government’s position, stating: “Currently, there are thousands of planning consent conditions stipulating that properties can only be bought by individuals. We’ve made the necessary legislative changes to ensure this and it’s now a legal requirement. In our effort to address the housing crisis, we are utilizing €5 billion from general taxes this year. A further €9 billion is needed to meet our housing targets, and I urge everyone to consider where this funding will derive from – it is imperative to understand the need for private investment in this sector.”
For now, any further changes to the law don’t seem to be on the table.
Another alternative for first-time home buyers is through applying for vacancy and refurbishment grants. The Government introduced the Vacant Property Refurbishment Fund in July 2022. The standard grant on offer is €50,000, with an additional €20,000 available if the property in question is verified as derelict by the applicant.
Government sources reveal they have processed 7,530 applications overall, with approximately 60 percent (4,376) approved so far. Interestingly, only 265 of these approved grants have been received by the applicants to this point. Opposition parties have urged the government to provide the funds up front rather than post refurbishment.