Home Loan Scheme isn’t working – Rent to Buy scheme needed

19 September 2018

Speaking in response to difficulty many people are having in qualifying for the Rebuilding Ireland Home Loan scheme, Labour Housing spokesperson Jan O’Sullivan TD spoke about the need to make the scheme accessible to working families who do not have the ability to save for a deposit due to rental costs by introducing a Rent to Buy scheme.

Deputy O’Sullivan said

“The Rebuilding Ireland home loan scheme is essentially a fresh face for the old local council mortgage scheme, which was a good scheme that helped many working people afford their own home.

“One problem with the Rebuilding Ireland scheme is that borrowers have to save up at least 10% of the cost of a house or apartment before they are eligible for the Home Loan. While this would be reasonable in ordinary times, today’s exorbitant rent levels mean that people simply cannot be expected to save up to €30,000 while also paying rent, even when working full-time.

“For example, a person earning a very typical gross income of €30,000 would have a net monthly income of around €2,100 after tax. That person could easily be paying €1,000 per month in rent and charges, even if sharing a property. That only leaves around €255 per week for food, transport, bills and other expenses. It is simply not realistic to expect that person to save up to €30,000.

“Average workers could be quite able to afford the Rebuilding Ireland Home Loan repayments, based on what they already pay in rents. Yet, those without the ability to live rent-free in a family home or to borrow a deposit from family or other sources are locked out of this scheme.

“It is unfair that so many full-time workers should be denied access to the Rebuilding Ireland Home Loan scheme. The Minister for Housing should extend the scheme’s eligibility to allow 95% mortgages or more in situations where someone has a record of maintaining their rent payments over a period of several years.

“As Labour has proposed, another option would be to create a rent-to-buy scheme, where a person has a tenancy in a property for three years, but if they successfully pay all their rent, it is converted into a deposit for the property that they will then go on to own.

“There has also been a hesitation by some local authorities to extend the scheme to those who have changed jobs, even though the scheme is explicitly for those in continuous employment not permanent employment with a single employer. It is quite common for people to move between jobs while still retaining continuous employment and ability to repay the Home Loan. Clear instructions should be given to those administering the scheme to ensure all those who are eligible can avail of it.”


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