Housing Authority to subsidise cost of first residences

The Housing Authority is launching a Lm2 million scheme to provide engaged couples with a helping hand to buy their first property.

This Equity Sharing Scheme is also intended to help families with children and single persons over 30 who are first-time buyers.

Authority chairman Marisa Micallef told The Times that the scheme, being officially launched this week, is another form of co-ownership.

The authority will finance up to Lm7,000 for the purchase of a first residence in shell form and a maximum of Lm10,000 for a finished property.

This means that if a couple can only afford to borrow Lm35,000 from the bank for a shell property that costs Lm42,000, the authority will make up the difference. In this way, the authority becomes a part-owner of the residence.

Ms Micallef is hoping the scheme will encourage people to buy existing property while helping to stabilise market prices, since no property price can exceed Lm50,000.

"We are capping it at Lm50,000 to ensure the price is not inflated. We have done our research and one estate agent said he had 1,500 properties on his books priced under this amount," she said.

"We want to support people who invest in a finished property. People seem to have a mania for buying shell units," she added.

Forty per cent of the scheme is dedicated to young engaged couples, another 40 per cent to families with children and the remaining 20 per cent to single persons, including widowers and separated persons who do not have children living with them all the time.

Those who take up the scheme will only be obliged to buy back the investment from the authority 10 years after the date of the sale contract. The authority will then establish whether the beneficiaries are in a position to take out another loan to purchase the authority's share of the property.

This scheme comes just months after the authority launched its successful shared ownership scheme, which received 1,000 applications for 260 properties the authority had made available.

In the past weeks there has been a huge debate over the rising cost of property after the Diocesan Commission for Justice and Peace voiced its concern about the "endemic and uncontrollable speculative practices" in the property market.

Gozo Bishop Mario Grech had also spoken about young couples who were having either to delay starting a family or getting into a lot of debt.

While Ms Micallef does recognise this problem, she feels the most vulnerable section are single-income families with children that subsist on about Lm5,000 a year.

"It bothers me that the Church is focusing solely on young couples when there is a swathe of people who don't have access to the property market, be it buying or renting.

"At least, young engaged couples usually tend to have two salaries. Most are not even prepared to buy a one-bedroom place to start off with or consider rent," she said.

"We are seeing a lot of break-ups because young couples are aiming too high and entering into huge debts and commitments.

"Many are living on borrowed money and well beyond their means. We are used to an incredibly expensive social life, which abroad is considered a luxury."

On the other hand, there are single-income families that are constantly balancing their budget and the second an extra expense surfaces, they cannot cope.

"Buying property is getting tougher and tougher and we're not all going to be able to live in three-bedroom places. We all have to compromise and manage our high expectations."