Equity sharing, one year later

A year ago the Housing Authority launched a new equity sharing initiative aimed at first-time buyers who wish to purchase their property from the private market. In cases where the price of a property cannot be reached through a bank loan, the authority covers the shortfall between the sum that can be borrowed and the property price.

The individual sum financed or guaranteed should not exceed €23,293.73 (Lm10,000) for the purchase of a first residence in shell form and €32,611.23 (Lm14,000) for the purchase of a first finished residence. Preference is given to property up to a maximum of €116,468.66 (Lm50,000), yet all property is being considered.

To ease the burden, the beneficiaries are not obliged to pay back the authority before 10 years have elapsed from the date of sale of contract. After this period it will be assessed whether the applicant is in a position to pay back or take an additional loan.

A year after its launch we can say that this new initiative has been very successful. The response was very positive and to date 144 applications have been submitted for assistance under the equity sharing scheme.

Looking at the analysis of the applicants it is clear that engaged couples form the group that benefits mostly from the introduction of this scheme, as they would more frequently encounter problems reaching the price of a property they wish to purchase through a bank loan alone.

Over 60 per cent of all applications for assistance under the equity sharing scheme have been submitted by engaged couples. Married couples, separated or single parents and single persons have also applied under this scheme.

The majority of applicants are purchasing property in the south east (36.5 per cent) and in central Malta (30.5 per cent), some in the north harbour region (14.3 per cent) and in Gozo (9.5 per cent), only few in the north west (7.1 per cent) and in the Grand Harbour area (2.4 per cent). The locality where most applicants have purchased their property is Birkirkara (12.7 per cent), followed by Fgura (seven per cent).

The authority has also analysed the type of property that the beneficiaries are purchasing. Two thirds of the applications were submitted for the purchase of a finished residence. This validates our policy that by financing or guaranteeing a higher sum we would encourage the purchase of finished properties rather than property in shell form.

The common trend among first-time buyers is also reflected in the analysis of the applicants under the equity sharing scheme who in the majority request assistance for the purchase of a flat (70 per cent).

The average price of the properties that are being purchased with assistance from this initiative amounts to €104,990 (Lm45,072). The average bank loan that applicants under the equity sharing scheme have received amounts to €73,612.98 (Lm31,602).

To date, the Housing Authority has approved €2,970,012 (Lm1,275,026) of financing to assist applicants with the purchase of their first home from the private sector.

Ms Micallef is chairman of the Housing Authority.