Home Deposit Scheme limit should be extended to at least €200,000 – real estate agents

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The limit of property price for the Home Deposit Scheme, which currently stands at €175,000, should be extended to €200,000, real estate agents have told The Malta Independent.

On Wednesday, a Home Deposit Scheme was launched through a joint agreement between the Social Accommodation Ministry, the Finance Ministry and local banks, wherein first-time home buyers will be able to apply for a 10% loan on their deposit.

“This scheme is directed towards those young adults who are finishing their studies or have started their first job and want to start looking into buying a home,” Social Accommodation Minister Roderick Glades said during the press conference.

Applicants will be given 25 years to pay it back and the government put a tax guarantee on the amount loaned with the local bank that the applicant is working with.

This scheme applies for loans that do not exceed €175,000, which has raised some concern among first-time buyers as it is quite difficult to find properties in this price range, especially if one is looking into buying a house rather than an apartment.

The Malta Independent spoke to a couple of real estate agents to see what feedback they got about this scheme from their buyers and to get their professional opinion on the €175,000 limit.

Dhalia Real Estate CEO Alan Grima said that the company has already received feedback about the scheme from potential buyers and it has been positive overall. “Dhalia had been highlighting the difficulties being experienced by first-time buyers for quite some time, so, such schemes are always welcome as they create a market for new buyers.”

On the other hand, RE/MAX CEO Kevin Buttigieg pointed out that the scheme has not yet been mentioned by their clients who are just getting to understand what it is all about.

“My overall opinion is that this is a great initiative but the mechanism of how this is going to work, needs to be explained better,” he said. “I still need to understand how the repayment of the 10% in respect of the deposit is going to be done and whether this will be included with the monthly loan instalments.”

He added that the amount of income required is slightly on the high side, especially if we are targeting people who have just finished their studies and are starting off their career.

As it stands, the scheme is available to people between 21 to 39 years of age. Single people between 21 to 30 years of age must have a total annual income of €19,000 to €25,000 while those between 31 to 39 years old must have an annual income of €25,000 to €35,000. Couples within this age range that apply for the scheme together must have an income of €19,000 to €35,000.

“I am of the opinion that this should apply for people earning from €17,000 upwards,” Buttigieg said. “I also believe this scheme by the government, should be set to tailor for a larger amount of people, as this really only covers approximately the purchase of 200 properties (based on a €15,000 grant to every purchase).”

With regard to the €175,000 property price limit, both Buttigieg and Grima agree that it is not easy to find suitable properties at this price or less so it would be more reasonable to extend the threshold to €200,000.

“With the €200,00 bracket one can buy a decent 2 or 3-bedroom apartment,” Buttigieg explained. “But it is very difficult nowadays to purchase a house at this price. Most of the developers purchase the land at the market price of 2019/2020 and excavation and building expenses are constantly on the increase, so I doubt it very much if the developers are in a position to lower prices.”