An overview of the various Property Assistance Purchase Schemes to allow the First Time Buyer get on the Property Ladder

There are currently several ongoing affordable housing schemes which can offer financial assistance to individuals looking to purchase primary residences in Ireland. The following is a description of the key schemes which are presently available, their individual offerings and their principal eligibility requirements for applicants.

Local Authority Affordable Purchase Scheme

• Eligible applicants under the Local Authority Affordable Purchase Scheme (“LAAPS”) will gain access to reduced prices for the purchase of newly-built local authority houses and apartments.
• The relevant local authority will take an equity interest in the home equal to the discount percentage provided off the full market value of the property. For example, where an applicant receives a contribution of 10% of the value of the home, the local authority in question will take a 10% stake in the property. If the value of the property increases, the amount that has to be paid back also increases.
• The local authority’s interest can be paid back at any time, either partially or in one lump sum payment, but there will be no requirement to do so.
• If the purchaser chooses not to redeem the equity share while living in the home, the local authority can do so when the property is sold or transferred, or after the death of the owner.
• Applicant to be first-time buyer, not having bought or built a property to live in prior to their application or fresh start applicant, where the applicant has lost their financial interest in a home they previously owned by reason of their previous relationship having ended or, they have gone through personal insolvency or bankruptcy.
• The property must be bought or built as Principal Private Residence.
• The applicant must show that their “purchasing power” is less than 85.5% of the full market value of the property or cannot get a mortgage for 85.5% of market value of the property. The purchasing power can be calculated as 4 times the gross annual income of the applicant.

First Home Scheme

• The State and “participating lenders” will help fund the upfront cost of new homes in return for an equity share in the property, up to a maximum of 30% of its market value.
• If the applicant is availing of the Help to Buy Scheme (HTB) the maximum amount is 20%.
• A service charge will be applied from the sixth year, as a percentage of the share which can be repaid monthly, annually or deferred until some later date. The service charge will gradually increase the longer the applicant remains within the scheme.
• Applicant to be first-time buyer or fresh start applicant, as described above.
• The applicant’s mortgage must be with one of the scheme’s participating lenders.
• The mortgage is the maximum amount obtainable by the borrower under the limits set by the Central Bank.
• Have a minimum 10% deposit of the property purchase price or build cost.
• Must be bought or built as the principal private residence of the applicant.
• Applies to newly built houses/apartments in a private development or self-builds on a privately owned site or house/apartment you are currently renting and living in and now looking to purchase as you have received a Notice of Termination as your landlord has put the property on the market.
• The property in question must be within the local authority property price ceiling for the relevant area.

Local Authority Home Loan Scheme

• Under this scheme, eligible first-time buyers and fresh start applicants are entitled to a government-backed mortgage of up to 90% of the value of the property that is either being bought or built, with no requirement that the property be a new build.
• This mortgage will be subject to a fixed interest rate which will vary depending on the agreed length of the loan.
• Applicants must be able to prove that they have received inadequate offers from two financial providers.
• An individual applicant’s gross annual income must not exceed €70,000 per annum, with €85,000 being permissible in the case of joint applicants.
• Must be bought or built as the principal private residence of the applicant.
• Finally, an applicant must demonstrate that they have a deposit equal to 10% of the lesser of the purchase price or market value of the property.

Help To Buy Scheme

• This scheme assists first-time buyers in purchasing newly built houses or apartments, as well as in the construction of self-builds where they are the applicant’s first home, which cost/are valued at less than €500,000.
• It operates by giving buyers a refund on their income tax and Deposit Interest Retention Tax (DIRT) paid over the four tax years prior to their application.
• Applicants who signed a contract for the purchase of the home or drew down on a self-build mortgage between 1 January 2017 and 22 July 2020 can claim the lower amount of:
• €20,000
• 5% of purchase price
• 5% of approved valuation of self-build
• Amount of income tax and DIRT paid over previous 4 years
• If completed between 23 July 2020 and 31 December 2024, the applicants are entitled to the enhanced Help to Buy scheme which offers the lower amount of:
  • €30,000
  • 10% of purchase price
  • 10% of approved valuation of self-build
  • Amount of income tax and DIRT paid over previous 4 years
• Eligible applicants will be first-time owners who are fully tax compliant in the four years preceding the claim.
• Applicants must also take out a mortgage worth 70% of the purchase price (if buying the property) or the approved valuation of the mortgage provider (if building the property).
• It is important to note applicants can benefit from the Help to Buy scheme while also utilising an equity share scheme such as those discussed above.

Mortgage Allowance Scheme

• The Mortgage Allowance Scheme assists tenants/tenant purchasers of local authority housing with transitioning into private ownership of other dwellings by contributing up to €11,450 to their mortgage.
• The amount is paid to the mortgage lender on the purchaser’s behalf over the course of five years, allowing mortgage repayments to be reduced by the annual amount of the allowance.
• Eligible applicants will be tenants/tenant purchases of local authority housing looking to purchase a private house or build their own home and return their current home back to the local authority.
• Alternatively, applicants who have been housing association tenants for over a year in housing under the Rental Subsidy Scheme and are looking to forego their current tenancy and obtain a mortgage for a private home will also be eligible.

How We Can Help

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Siobhan Whelan in our Real Estate Department (swhelan@bhsm.ie /+353 (0)1 440 8339).

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.