When it comes to housing, buying has always been favoured over renting. While renting serves as a natural progression for many young adults venturing out on their own, the dominant belief always leans towards homeownership as a smarter financial move. In Ireland, this sentiment rings especially true. Even if settling down or lifestyle preferences aren't at the forefront of your mind, the stark contrast in costs between renting and buying should push homeownership higher on your list of long-term goals.

The High Cost of Renting

On average, renters pay €3,500 more annually compared to homeowners with a 90% loan-to-value mortgage on the same property. In most regions in Ireland, tenants will pay at least €100,000 more than homeowners over 30 years. Despite this glaring discrepancy, why do people still opt to rent?

According to the 2023 Residential Tenancies Board Rental Sector Research Summary Report, renters have varying reasons for their choices, with 30% citing their inability to secure a mortgage as a prime factor. While this obstacle is significant, it is not insurmountable. For those looking to get onto the property ladder, the main constraints to their homeownership journey will be deposit savings and income limits. Government initiatives like the Help to Buy Scheme and First Home Scheme aim to address these hurdles.

Overcoming the Deposit Dilemma with the Help to Buy Scheme

The Help to Buy (HTB) Scheme was introduced to aid first time buyers in overcoming deposit savings challenges. With the HTB, eligible applicants can receive a tax refund of up to €30,000 or 10% of the home's purchase price.

Revenue's 2023 Help to Buy Incentive Statistics demonstrate the scheme's impact, with over 44,000 claims approved since its inception, enabling first time buyers to bolster their savings and realise their homeownership aspirations.

Empowering First Time Buyers through the First Home Scheme

In 2023, the Central Bank adjusted loan-to-income limits for first time buyers, allowing them to borrow up to four times their annual income. The First Home Scheme (FHS) complements this change by offering financial support to buyers, bridging the gap between the available mortgage, deposit, and property purchase price. The FHS makes the prospect of homeownership possible for many first time buyers on modest incomes.

Since its launch in July 2022, the FHS has expanded its eligibility criteria to include tenants who wish to buy their rental property from their landlord and those who are self-building their own home. The First Home Scheme reports that, at end December 2023, a total of 3,196 applicants have been approved and 1,255 homes have already been purchased under the Scheme.

Buying is the Best Choice

Homeownership offers long-term financial stability, as most homeowners clear their mortgages by retirement, freeing up disposable income. In contrast, renters may face ongoing rent payments well into retirement, posing financial challenges.

With mortgage payments often cheaper than rent, transitioning from renting to owning becomes an attractive prospect. Government support schemes like the HTB and FHS pave the way for first time buyers to make this transition out of the rental market and accelerate their way onto the property ladder.

For more information on leveraging these supports for your homeownership goals, visit our website. When you're ready to get started on your mortgage application, contact us for personalised advice and support throughout your mortgage journey.