‘SSIA fund’ can help first-time buyers

By Juno McEnroe

The Government should consider funding an SSIA-type mortgage savings scheme to help young and low-income buyers get on the property ladder, says the Housing Finance Agency.

Housing Finance Agency chairwoman Michelle Norris said other European countries have successfully used such special top-up saving schemes to fund private and public housing needs.

The agency, borrowing from EU banks, has a loan book of €3.6bn which it primarily lends to housing agencies at low rates for building social housing.

“In the Austrian model, people save up the money, they get a government subsidy,” Ms Norris told the Irish Examiner in an interview. “They then take it out in the end after 10 years or whatever, and spend it on a house deposit but during the 10-year period when it is in the bank, it is lent out for social housing. So it funds both.”

Low-income buyers are now struggling as prices for homes spiral out of reach. Recent figures show the average house price in Dublin is just over €354,000, rising to €559,000 in the south of the county. Home prices in Cork City are averaging €260,000 and €272,000 in Galway city.

The Government funds the help-to-buy scheme for first-time buyers, but this only helps new property purchases or self-builds and comes as a tax rebate.

However, a State-financed mortgage saving top-up scheme here could not only fund private buyers but also see money building up in institutions go into a special pot for social housing.

Ms Norris, who is also UCD’s head of the school of social policy, social work and social justice, said: “In Austria, people save in a credit union or a building society.

“They get a little supplement from the government for the savings. They can spend it on a house deposit or education. It is limited by legislation what you can spend it on.”

The Austrian scheme is run by Bausparkassen, a building society. The scheme is popular among younger households and in rural areas and small towns and 17% of all home mortgages are under Bausparen [building societies] there.

“They’re saving money and get a little subsidy from the government for the money, for their interest rate,” said Ms Norris. “After a period, they take it out and spend it on a house deposit. It’s like a special savings scheme, for certain purposes.

“That money in there, though, is then lent on to fund social housing. That money, before it is drawn out, it is used as a form of revenue for the banks. They just lend it out to housing associations. The savings has an additional social benefit, as it is also used to fund social housing.”

The model is also used in France as well as Austria.

“These types of schemes are generally limited to users,” said Ms Norris. “You can only spend for it for a deposit on a house as a first-time buyer. So it is not there to subside very wealthy people.”

Ms Norris said credit unions here have been in discussions about setting up a large housing fund and lending this out for social housing. Expanding on this could facilitate the SSIA-type mortgage scheme, she suggested. The SSIA scheme saw the state provide a 25% top-up on sums deposited in banks.

“And if there were proper credit assessments put in place at a central level, that model could work well I feel,” she said.

Ms Norris said there needs to be ownership restrictions placed on homes that will be released under the Government’s new affordable housing scheme, set to be unveiled in the coming weeks.

“Where we have a system that people can make very big profits from buying council housing or affordable housing and then the state has to go back in and spend money on providing more, that is not really a sustainable system,” she said.

This story originally appeared in the Irish Examiner.


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