A new Government scheme, set up to make it easier for first-time buyers to afford a new build home, has opened for business today.

The €400m 'First Home Scheme' aims to bridge an existing affordability gap by providing buyers with part of the purchase price for their home, in return for the scheme taking a minority equity stake.

The maximum stake that the scheme will take is 20%, if the buyer is also availing of the Government's separate Help to Buy scheme, and 30% if Help to Buy is not used.

The scheme is available initially to first-time buyers and other qualifying homebuyers, including people affected by a relationship breakdown or insolvency, who are taking out mortgages from AIB (including its EBS and Haven Mortgages businesses), Bank of Ireland or Permanent TSB.

Other mortgage providers may join the scheme in the coming months.

It is open to buyers of newly-built houses and apartments in private developments.

When someone who has bought a home using the scheme subsequently decides to sell it, he or she will be required to use the sale proceeds to redeem the outstanding mortgage and pay to the scheme the portion of the sale proceeds that corresponds to the scheme’s equity stake.

For example, if someone received 20% of the purchase price when they bought the home, he or she will have to pay the scheme 20% of the proceeds when they sell the home.

Scheme users will have the option, but not the obligation, to buy out some or all of the First Home Scheme equity stake at any time, if they wish and have the resources to do so.

No payments are due to the First Home Scheme if the equity stake is bought out in the first five years of ownership.

From year six onwards, scheme participants will be liable for a service charge.

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The scheme is making €400m available, to facilitate the purchase of up to 8,000 homes over a five-year period, subject to demand.

"This scheme we are launching today will support first-time buyers and those seeking a fresh start by helping to bridge the gap between what they can afford and the price of the home they wish to purchase," said Darragh O'Brien, Minister for Housing, Local Government and Heritage.

However, Sinn Féin has described the scheme as a "pro-developer scam".

"It will push up house prices and saddle working people with ever greater levels of debt," the party's housing spokesperson Eoin Ó Broin said.

"The solution to the affordable housing crisis is not to push up house prices and increase personal debt, but to deliver tens of thousands of genuinely affordable homes at prices working people can actually afford."

As a founding partner, Bank of Ireland said it is investing €70m into the First Home Scheme.

Bank of Ireland said that supporting the construction of new homes is of strategic importance for the bank.

"We finance homebuilding nationwide that aims to provide suitable options for all home buyers," it said in a statement.

Alan Hartley, Director of Home Buying, Retail Ireland, said, that Bank of Ireland strongly supports the ambition of many of its customers to own their own home.

"Our participation in the First Home Scheme as a founding member reflects our ongoing commitment to help first time buyers get their first step on the property ladder," Mr Hartley said.

"We are also delighted to be a part of a scheme which supports the delivery of energy efficient homes and a societal move towards a low carbon future," he added.

AIB has today also welcomed the launch of the First Home Scheme, which forms part of the Government's Housing for All plan.

Colin Hunt, the chief executive of AIB, said that addressing the housing supply deficit is one of the most urgent social and economic issues the country is facing.

"AIB is delighted to welcome this joint initiative, which has opened for applications today, providing more people with the opportunity to own their first home," Mr Hunt said.

He said that AIB offers those looking to buy their first home a wide variety of competitive rates through our AIB brand, along with our EBS and Haven brands.

"We also offer low green mortgage rates for those wishing to buy energy-efficient homes1 to encourage and support the transition to a low carbon economy," he added.

Director of Property Industry Ireland, Dr David Duffy said it had been seeking the introduction of such a scheme for some time and welcomes today's launch.

"The scheme will offer more families the opportunity to own their own home. The scheme will stimulate the supply of new homes aimed at first-time buyers," he said.

Property advisor, Savills Ireland said it was delighted to see the scheme begin.

"Affordability is the central issue at the heart of Ireland's housing problem, therefore we welcome the government's intervention to bridge the affordability gap by providing buyers with part of the purchase price for their home," said David Browne, Director of New Homes.

"Although it won’t solve the overall issue of affordability, it is a step in the right direction."