Tánaiste Joan Burton has announced a new initiative to support young people who are saving for their first home, in her keynote speech at the Labour Party National Conference tonight.
"We’ll establish a 'Save to Buy' scheme to give first-time buyers a helping hand. This will give them a cash top-up when saving the deposit for a home," she said in her leader’s speech tonight.
The party has indicated that it intends to bring in the new initiative if re-elected as it recognises the new Central Bank guidelines make it difficult for young families seeking to buy a home.
The scheme will provide a cash top-up on the deposit they’re saving for a house. For every €4 a first-time buyer saves, Labour has pledged that a top-up of €1 will be provided, subject to a maximum cap of €1,200 a year over five years.
A first-time buyer would therefore receive a maximum of €1,200 in assistance if saving for a deposit for one year, rising to a maximum of €6,000 if saving over five years.
Example: "Taking Dublin as the area of the country where prices are highest, under the current guidelines, a typical first home costing €290,000 would require a deposit of €36,000 (10% of the first €220,000 and 20% of the balance).
"Our scheme would enable a first-time buyer to receive €6,000 of assistance with the deposit, requiring them to save €30,000 rather than €36,000."
The Labour Party has pointed out that the Central Bank is independent in its functions and Labour does not propose that the guidelines be changed; that is a matter for the bank.
Briefing notes about the scheme state that: "The top-up will be paid at the time of house purchase, subject to contracts signed.
"The design of the scheme means that it is targeted at the average person saving from their own resources. It’s aimed solely at first-time buyers only and strict criteria would apply to ensure this is the case.
"Based on current demographics, we estimate that up to 30,000 first-time buyers may avail of the scheme, at an estimated cost of €180m.
"This needs to be seen in the context of wider expenditure on social and affordable housing provision.
"The Government has already announced a record €4bn investment to provide 110,000 social houses by 2020, and Labour will be proposing a separate affordable rental scheme in our manifesto to assist those whose income is too high to qualify for social housing, but too low to afford market rent."
