First-time home buyers will have up to 30 per cent of their monthly house loan repayments covered by the government for the first 10 years if they qualify under a new scheme launched yesterday.
The new Housing Authority scheme replaces the Equity Sharing system that was scrapped abruptly last year after it was oversubscribed. Under the old scheme, buyers were given a lump sum, which they had to pay back after 10 years.
This time, the buyers will not have to repay the financial help received, making it much more costly for the government but also more attractive to those needing assistance.
Still, this is being proposed as a more sustainable option as it staggers the amount the government is shelling out and ensures that applicants do not spend more than they can afford.
Social Policy Minister John Dalli said during the launch that the old scheme encouraged first-time buyers to buy more pricey property, resulting in a situation whereby they might not have been able to afford to pay back the government.
Under the new scheme, applicants will buy a property they can afford and the Housing Authority will be making it easier for them by assisting them in the first 10 years of repayments.The old scheme had affected the government's cash flow by about €6.6 million, even though with the new one the authority will have to fork out an estimated €2.5 million that will not be returned.
The ministry said applicants will be separated into three different categories, which will help define what sort of properties should be bought.
Therefore, a single person can buy a property worth up to €70,000 and the government will pay 30 per cent of the monthly repayments. A married couple with two or more children can buy a property of up to €120,000 and the government will pay 18 per cent of the monthly repayments (see tables below for more details).
The scheme will be available for married couples, couples intending to get married, single parents, persons with a disability, separated persons, single persons and those who have lived in institutional or foster homes.
The old scheme had a quota of 250 applicants and the scheme launched yesterday will be open to about 300 on a first-come first-served basis. After that, the Housing Authority will review its options and see how to continue the scheme.
Applications will be available by the beginning of December and those who apply will have to satisfy the necessary criteria that will include a means test and an analysis of the applicant's status, income and assets.
More details on who will be eligible will be announced when the scheme is launched.