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Fears first-time buyer grant would push up home prices.

A Labour Party proposal to introduce a cash grant scheme for first-time buyers is likely to be shot down amid fears it would cause house prices to increase further.

The measures would mean the minister directs local authorities to provide cash grants to applicants struggling to get onto the property market in cities such as Dublin, Cork, Limerick and Galway.

Dublin Central TD Joe Costello and party chairman Jack Wall said measures are needed to assist those trying to get onto the property ladder.

But senior Government sources have voiced caution over such a move, warning against any such measure that could cause house prices to escalate further.

Mr Kelly is also due to roll out a suite of measures aimed at stalling spiralling rent bills

Are first-time buyers being ruled out of the market?

The property market in Dublin and other sought-after areas has slowed significantly because first-time buyers (FTBs) can’t get mortgages to buy properties there under the new Central Bank rules.

Typical working couples are getting approved for €100,000 less in mortgage borrowings under those rules. This is forcing FTBs to either rent or to buy further afield. It is also believed the recently discussed first-time buyer grant, if re-introduced, will be of little, if any, help to house hunters. The State grant, which would likely be between €3,000 and €5,000, was discussed at a Labour Party parliamentary meeting earlier this month.

A couple earning €75,000 between them, which is around the average wage each, could have borrowed between €340,000 and €360,000 before the rules kicked in on February 9 – as long as they could prove they were saving or paying rent equivalent to the mortgage repayments on that mortgage for at least six months. That couple could today borrow €262,000 – that’s a massive drop.”

FTBs on average salaries who are looking to buy property in or near Dublin have been hammered by the new rules.

The average first-time buyer will find it harder to get a deposit together so they can buy in Dublin, even Lucan or Celbridge may be beyond their reach. So they have been driven to look to commuter belt areas like Enfield, Kilcock, Portlaoise and Drogheda.

 

State-funded grants for First-time Buyers under Labour.

First-time buyers will receive state-funded grants to help them meet strict Central Bank deposit limits, under plans being considered by Environment Minister Alan Kelly.

This news comes as senior Government sources last night said its announcement on a new mortgage arrears plan is now not expected until after the Spring Statement on the economy on April 28.

This is because of continued disagreement between the Coalition over Labour demands to reduce the bankruptcy term from three years to one year.

The new Labour proposals, which are being driven by a number of party backbenchers, are being targeted at couples living in urban areas who cannot meet the deposit rules in order to obtain a mortgage.

The measures will mean the minister directs local authorities to provide cash grants to applicants struggling to get onto the property market in cities such as Dublin, Cork, Limerick and Galway. A similar scheme, which previously saw first-time buyers being given grants of up to £IR3,000, was scrapped in 2002.