Buying a home is a dream for many, and in Ireland, various schemes and initiatives have been put in place to help turn that dream into a reality. With housing prices on the rise and the challenges faced by first-time buyers, these programs aim to provide much-needed support. In this article, with support from Joe Flanagan, Business Development Manager with Irish Mortgage Corporation, we’ll explore some of the key supports available for home buyers in Ireland.
Help to Buy (HTB) Scheme: A Lifeline for First-Time Buyers
The Help to Buy (HTB) scheme is a beacon of hope for first-time buyers in Ireland, especially those eyeing newly-built homes. The primary goal of this initiative is to assist individuals in purchasing a house or apartment valued at up to a maximum of €500,000. However, what truly sets this scheme apart is its unique financial assistance mechanism.
Under the HTB scheme, eligible first-time buyers can claim a refund of income tax and Deposit Interest Retention Tax (DIRT) paid over the past four tax years. This refund can be used as a significant contribution towards the customer’s 10% deposit, easing the financial burden of purchasing a home.
One of the essential criteria for HTB eligibility is that the mortgage must cover at least 70% of the purchase price. Furthermore, to ensure the scheme’s effectiveness and prevent exploitation, beneficiaries are required to reside in the property for a minimum of five years. This residence requirement encourages long-term commitment to the property and the community.
Joe emphasizes the importance of this scheme, stating, “The Help to Buy scheme has been instrumental in helping first-time buyers step onto the property ladder, particularly in the face of escalating property prices.”
First Home Scheme (FHS): A Gateway to Affordable Housing
For those who aspire to become homeowners but face financial constraints, the First Home Scheme (FHS) is a potential solution. This scheme is open to both first-time buyers purchasing new build homes and first-time buyers buying second-hand homes through the Tenant Home Purchase scheme.
Administered by BCM Global, the FHS takes a unique approach by securing an equity stake in the customer’s house through an inhibition, which is essentially a charge on the property. This arrangement allows for shared ownership, making homeownership more accessible.
One noteworthy aspect of the FHS is the introduction of a service charge after the fifth year of homeownership. This charge is factored into the assessment of the customer’s borrowing capacity, ensuring that buyers are prepared for this additional financial commitment in the later stages of their homeownership journey.
Affordable Housing Scheme (AFH): Bridging the Affordability Gap
The Affordable Housing Scheme (AFH) plays a pivotal role in making local authority-provided homes available at reduced prices to first-time buyers. This scheme primarily targets individuals whose combined mortgage and deposit cannot cover the market price of a newly built home.
Under the AFH, the local authority takes a percentage equity stake in the home, equal to the difference between the open market value and the reduced price paid by the purchaser. Importantly, homeowners have the option to buy back the local authority’s equity stake at any time, providing a clear path to full ownership.
Each Local Authority (LA) in Ireland operates its own individual AFH scheme, with a legal priorities agreement submitted to the bank for approval. Applicants must coordinate with their respective LAs to ensure that this agreement is in place before the bank can approve their application.
Vacant Property Scheme: Breathing New Life into Abandoned Homes
The Vacant Property Scheme is a critical initiative aimed at revitalizing abandoned and underused properties across Ireland. Funded by the Croí Cónaithe Towns Fund, this scheme serves as a financial lifeline for individuals looking to bring vacant properties back into residential use.
To be eligible for the scheme, the property must have been vacant for at least two years before 2008. Successful applicants can receive up to €50,000 from their Local Authority (LA), with an additional €20,000 top-up if the refurbishment costs exceed the grant amount.
However, there’s a caveat to this support. If a customer decides to sell the property within ten years of receiving the grant, they are obligated to repay the local authority. The repayment amount depends on the length of time the customer has resided in the property.
It’s important to note that the grant is not considered during the bank’s assessment of the customer’s financial situation, and it cannot be used as part of the customer’s balance of funds. Customers must be financially prepared to cover any essential repair costs beyond the grant.
In conclusion, Ireland’s commitment to supporting home buyers is evident through the various schemes and initiatives in place. These programs aim to level the playing field and make homeownership more accessible, especially for first-time buyers. With the Help to Buy, First Home, Affordable Housing, and Vacant Property schemes, Ireland is taking proactive steps to ensure that the dream of owning a home remains within reach for its citizens. As Joe aptly puts it, “These initiatives are not just about buying a house; they’re about building homes, communities, and futures.”
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