Grant for first-time property buyers under Labour plan

Once elected, a Labour government plans to introduce a grant to help first-time buyers get a foot on the property ladder.

This grant forms part of four schemes proposed by the party yesterday as part of its electoral manifesto, and a follow-up to its 648-page 'Plan for a New Beginning'.

"First-time buyers, from the middle class and below, are facing problems because of high property prices, so we felt we had to propose these initiatives," Labour leader Alfred Sant said.

However, reacting to its proposals, the government said it was clear that the Opposition had no idea what schemes existed and it was essentially proposing nothing new.

Labour's initiatives, drawn up after a series of internal discussions, are intended to stabilise property prices in a way that encourages the developer to offer more competitive prices which young couples could afford.

The party is proposing that these incentives are implemented by the Housing Authority.

The first incentive is a grant that does not exceed 10 per cent of the cost of the property, which will be capped at Lm50,000 (€116,468). Dr Sant insisted there will be no means testing.

This grant, including interest, will have to be refunded, once the couple sells its first property. Every refund will go back into the same fund so that it could eventually become self-financed.

The second initiative is geared to cap the interest rates so as not to exceed the bank interest rate (not the base rate) of 4.5 per cent. This will be granted for up to seven years and applies to those who already own a property.

"The increase in interest rates on monthly loan repayments are burdening young couples and families," he said.

Meanwhile, the third incentive will see the reduced stamp duty on the first property (at the rate of 3.5 per cent) applying to property of up to Lm50,000 (€116,468) instead of the first Lm30,000 (€69,881).

The last incentive, which will involve talks with the banks, proposes to suspend loan repayments for up to one year in cases where the family's breadwinner is made redundant.

"These four schemes confirm the Labour Party's commitment to help first-time buyers own their property," he said.

In a statement the government said many young people and families were already benefiting from existing schemes.

The grant proposed by Labour already existed in the Housing Authority's numerous schemes, including the Share Ownership Scheme and the Share Equity Scheme.

In its pre-budget document the government had also proposed subsiding the rates of interest on loans for first-time buyers.

"It's nice to see that Alfred Sant is repeating what's already mentioned in the pre-Budget document," the government said in a statement.

The proposal to suspend loan repayments for those who had been made redundant was something that was already being practised by the government hand in hand with commercial banks.

The government also questioned whether the Labour party planned to increase the stamp duty, which is paid over Lm50,000, and is currently set at five per cent.

"Essentially the Labour Party is proposing nothing new," the government said.