Lm2 million in aid of first-time buyers

There are a number of problems or inefficiencies in the housing market right now. Firstly, prices are high and increasingly beyond the reach of first-time buyers. Secondly, there is a linked problem in that we have an oversupply of three-bed units (already built and awaiting permits or being planned too), and not enough one- and two-bed units which obviously makes the affordability problems even more acute.

It is essential that planning policies, such as limiting areas to flats of 120 m2 as a minimum are adjusted/changed to reflect this need for smaller and cheaper units. And thirdly, but by no means insignificantly, people are finding it harder to buy in their area of choice, and are having to give up or look elsewhere.

It is easy to dismiss the last item as people just being choosy, but in a society like ours, where family contacts are so important, and where a whole generation of grandmothers (and a few grandfathers) are currently the main reason the few women, and particularly mothers of babies and young children we have working are doing so, we should strive to maintain this family support, which is good for working mothers, children and society as a whole.

In Wednesday's Budget Prime Minister Lawrence Gonzi announced more and much needed help for first-time buyers. We are already doing a lot, but clearly more first-time buyers need help.

We have just offered 260 units for sale on a shared ownership basis, an experiment that started last year that is going from strength to strength. This year we received a staggering 1,000 applications, which is good news because it means this new shared ownerhsip initiative is liked because it is fair and affordable, but worying because we do not have enough supply to meet the demand.

With this in mind, and also bearing in mind there is supply in the private sector, we are reserving Lm2 million, and putting the final touches to a scheme where we will be offering financial help to assist first-time buyers to get on to the property ladder.

The idea is to either lend a deposit plus, or offer a guarantee to the banks for first-time buyers for a percentage of the cost, to help them reach the price of their first home. Many first-time buyers have an amount in the bank, say Lm10,000, which they need to use for finishing and furnishing, but do not have enough for a deposit, and to cover the various fees.

The Housing Authority will therefore start offering a form of shared ownership in the private sector too, which with the help of our banks should allow more to become first-time buyers, an aspiration of the vast majority of Maltese workers.

Average first-time buyer homes cost Lm40,000 plus in a few localities and Lm50,000 plus in others. I am obviously excluding luxury developments. Loans are on average at around Lm10,000 less than this amount, so many are managing, but those on lower incomes, or no family help or less money saved in the bank, are having serious difficulties to get on to the property ladder. This should help.

This scheme, which we hope to be launched by early November will be of much needed relief for first-time buyers. It is a shame that so much property is unsold when there is such a high demand.

This is, at this stage a one-off scheme to help first-time buyers. If it is successful we hope Government will fund it again in the coming years. But we have to include many checks and balances. We have no intention of raising prices and values will be very strictly checked.

The reality is that many young couples are just a little bit short of getting on to the property ladder today. We hope to help around 250 first-time buyers with this initiative, if they need our help. The scheme may need polishing later as this is another completely new venture for the Housing Authority, but we are concentrating on the hard pressed average income first-time buyer, and with the co-operation of banks and others we should be able to make a success of it...

Ms Micallef is chairman of the Housing Authority