[WATCH] PM tells developers ‘don’t raise house prices’ as first-time buyers get €1,000 grant

Robert Abela has appealed to developers not to shoot themselves in the foot by artificially inflating property prices as he unveiled a new assistance scheme for first-time buyers.

The Prime Minister on Friday formally unveiled a scheme that will see first-time buyers receive a cash grant of €1,000 per year for the first 10 years as assistance for loan repayments on their property.

Asked whether such a scheme could have an inflationary impact with developers increasing the price of property on the premise that buyers could now afford more, Abela said such a concern should not stifle assistance.

“If we think in this way we would introduce no schemes but I appeal to developers not to artificially inflate prices because they would be shooting themselves in the foot,” he said, adding the government’s intention is to enable more people to become home owners.

He shunned any suggestion of direct government intervention in the market to control property prices.

In a second appeal, Abela urged commercial banks not to follow the lead of HSBC that has tightened accessibility to home loans by asking buyers to fork out 20% of the property’s price.

The government scheme unveiled on Friday was a Labour Party electoral pledge and had been announced in the last Budget.

The scheme will come into force on Monday and will apply retroactively to first-time buyers who bought property from 1 January 2022. Applications will first open for those who bought property in 2022 and progressively apply to first-time buyers in subsequent years.

To benefit from the scheme the first-time buyer will have had to take out a home loan to finance the purchase and the money will be paid directly to the buyer’s account – a joint account in the case of a couple.

In those cases where a couple buy a property but one of the applicants is not an eligible first-time buyer, the grant will be reduced to €500 per year.

Abela said the grant will alleviate some of the burden that first-time buyers face at a time when they are still at the start of their career ladder.

In the first year, some 3,000 first-time buyers will benefit from the grant that will cost public coffers €3 million.

“Government is focussed on addressing challenges people face in their everyday life and this scheme joins many others in the housing sector we introduced over the years to enable people to become home owners,” Abela said.

He insisted government had become a player in the housing market by identifying the problems impacting particular groups and creating schemes and incentives targeting these people. “Housing is not just about social housing but also about making housing affordable by enabling first-time buyers and other categories to become home owners,” Abela said.

Housing Minister Roderick Galdes said the new scheme was indicative of government’s willingness to support first-time buyers, whoever they are.

“We will continue addressing the challenge of affordable housing over the coming months and years, even through the provision of housing units,” Galdes said.