The State would jointly buy homes with tens of thousands of young homebuyers under a radical new plan put forward by Labour Party leader Pat Rabbitte last night.
Under the scheme individuals would buy as much of a share in the house as they can afford, with the State paying the rest, though they would be able to buy more of the house over time at market value.
Last night Labour said the plan would cost the State €100 million a year in mortgage interest, though it would "over the course of time" save taxpayers' money because it would cut the demand for local authority homes.
Opening Labour's annual conference in Dublin, Mr Rabbitte said the housing crisis has created "impossibly long" housing waiting lists, forced unsustainable commutes upon workers and damaged family ties. "We have to come to grips with this issue. What is required is a mechanism that allows people to get a foot on the housing ladder," the Labour leader told delegates. Unlike existing affordable housing schemes, which are limited to those earning below €40,000, homebuyers would not have to meet income limits, nor would they face restrictions about selling the house at any time.
"Labour's solution," said Mr Rabbitte, "is called 'Begin To Buy'."
Those who want to get on to the property ladder will be facilitated to purchase a home in line with their assessed housing needs.
"Where they cannot afford the full cost, the State will take out a mortgage on the balance. When families are ready to purchase additional equity, they may do so.
"When the family wants to move house, the home can be sold, and the proceeds split in proportion to the original shares between the family and the State," he declared.
The author of the plan, Labour TD Eamon Gilmore, said a €2.5 billion exchequer fund managed by the National Treasury Management Agency would fund the €100 million interest bill.
Last night, Fine Gael said it had not been consulted about Labour's plans. "However, we welcome anything that helps homebuyers. Our own policy will be ready in a couple of weeks."
Given the political importance of the issue, the Government is likely to attack Labour's plan on the grounds that it will accelerate prices and do nothing to increase the availability of houses.
The €2.5 billion fund would be created from exchequer funds, but it would not come from any existing State fund, such as the National Pension Reserve Fund. "It would be exchequer money," Mr Gilmore told The Irish Times.
The lack of qualifying income limits would not be abused, he said: "People will not want to own less of a share of a house than they can afford. People want to own their own homes." However, qualifying homebuyers would pay a still unfixed monthly fee in return for the State's assistance with their mortgages: "It will be low enough to be affordable, high enough to discourage abuse," he said.
In an example given in a Labour briefing document, seen by The Irish Timeslast night, a couple able to qualify for a €250,000 mortgage would be able to bid for a €400,000 property once they have been given clearance by their local authority.
"The housing authority will guarantee the balance of the loan necessary to buy at that price - the authority can do this by taking a proportionate stake in the property, with the house-hunter undertaking a minimum quarter stake in the home," the document declared.
"The couple will then repay their approved mortgage in the normal way." The housing authority will also finance the balance, through a new Housing Assistance Fund.
"The couple will be free to sell and redeem their share of the property, which they can then use to buy somewhere else - using the same scheme if necessary. They will also be free and, in fact, incentivised to increase their share in the property at any time.
"Any increase in the value of the property will be shared in accordance with the initial shares of cost. Under this scheme every working household will be enabled to begin to buy a home and to truly settle within our communities," it said.
