Lenihan exploring the establishment of a new well-funded, shared equity scheme

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Cowen plans dig-out to help low-income earners buy homes
Shane Coleman and Martin Frawley
But no budget changes to stamp duty
THE government is drawing up plans for a state-sponsored fund to help low- and middle- income earners overcome the credit crunch to buy houses. But it will not reduce stamp duty or bring back the first-time buyer's grant in the upcoming budget.
Developers are being bluntly told by ministers they need to cut house prices. "There will be no gimmicks and no tinkering with the housing market," one senior source said. "If developers want to off-load stock, they will have to get their prices right."
While the government is emphatic it will not interfere with the market price for housing by ruling out stamp duty changes or a return of the first-time buyer's grant, it believes there is a need in October's budget to help people who cannot raise the money to buy a house due to the credit crunch.
Housing minister Michael Finneran and finance minister Brian Lenihan are exploring the establishment of a new well-funded, shared equity scheme. The state would fund the difference between the mortgage obtained by the buyer and the price of the house. In return, the state would be granted a proportional equity stake in the property. The idea is this could be bought out over time or when the house is sold – interest free.
Sources insist this would not amount to tinkering with the market but simply provide a type of interest-free, bridging finance to low- and middle-earners, who cannot access credit. "It will allow people get on the ladder," one government source said.
Meanwhile, serious question marks hang over a number of prestige infrastructure projects – such as the Dublin Airport Metro and the Western Rail Corridor. The Sunday Tribune has learned that the cabinet last week agreed to defer all "non-essential" spending on National Development Plan projects.
As much as one-fifth of the planned capital spending over the next two years was "non-core", one source said.
Although he declined to be specific, he said some projects would have to be delayed as part of a prioritisation process. "The intention is still to do them. But it won't be in the same time scale."
With the national pay talks resuming tomorrow, the country's 300,000 public servants face the prospect of no further pay increases until 2010, saving the exchequer over €600m next year.
Taoiseach Brian Cowen is adamant that the struggling exchequer needs a year-long pay pause. The current pay deal, which runs out at the end of the month, already had a five-month public sector pay pause built in. An extra 12-month pause would mean no further increase until March 2010, although this will be fiercely resisted by the unions.
Employers continue to oppose the unions' demand for a flat rate cash increase above inflation for lower-paid workers. However, the Sunday Tribune has learned the government may step in and, in a 'once-only' offer, reduce PRSI for the low-paid in order to cut a deal.

September 7, 2008

http://www.tribune.ie/news/article/2008/sep/07/cowen-plans-dig-out-to-help-low-income-earners-buy/