Earlier this month, Housing Minister Darragh O’Brien told Prime Time that the Government’s proposed shared equity scheme, a core part of the recently published Housing For All plan, had been approved by the Central Bank.
But the Central Bank has indicated that the scheme, which could see the State paying up to 30% of the purchase price of a newly built home, has not in fact been given approval.
In a statement to Prime Time responding to a query about Minister O’Brien’s claim, the Central Bank said that it is currently considering the potential interaction between mortgage measures and the shared equity scheme.
“There is no further update at this stage but the scheme will also be considered as part of the regular annual review of the mortgage measures,” the bank said.
The bank’s statement contradicts what Minister O’Brien told Prime Time on 2 September, hours after he launched the Housing For All plan, which promises to deliver 300,000 new homes by 2030.
“The Central Bank of Ireland have approved the shared equity arrangement, and it is a way of people bridging that affordability gap,” he said.
A spokesperson for Minister O’Brien acknowledged to Prime Time that the scheme is “awaiting final approval”.
The spokesperson indicated that the Minister did not intend to suggest that the scheme had been fully approved by the Central Bank.
“In referring to approval for the Shared Equity ‘arrangement’, the Minister was referring to the aspect of the scheme whereby, informed by engagement with the [Central Bank], the scheme is being designed as an equity product rather than being a debt on the purchaser,” they said.
An “Affordable Purchase Shared Equity Scheme” was discussed by the Central Bank Commission in May, but minutes from the meeting note that the scheme “[remained] under deliberation”.
The shared equity scheme was first announced in October 2020, when the Government pledged in Budget 2021 to support the scheme with an investment of €150m.
Sinn Féin housing spokesperson Eoin Ó Broin told Prime Time that it was “troubling that a year after it was first announced the details of the scheme have not been finalised nor submitted to the Central Bank”.
“It is disappointing that the Minister claimed the controversial shared equity loan scheme has been approved by the Central Bank when this is not the case,” he said.
The scheme, which is designed to make the purchase of a new home more affordable for those who are just shy of the income required to buy a home, has been the subject of considerable criticism.
The Central Bank, the Economic and Social Research Institute and numerous commentators have warned that it will just lead to greater house price inflation – an assertion Minister O’Brien and the Government dispute.
A source within the bank has told Prime Time that it is not in favour of the scheme and it has made that known, both internally and externally.
The source said that the Minister was playing with words when he tried to suggest the Bank had approved the scheme, since it does not actually require Central Bank approval.
The bank will instead have a function in approving the involvement of lending institutions in the scheme.
The scheme is a central plank of the coalition’s new €4bn housing plan, and would be rolled out from early next year, according to the Government.