In an Irish housing market that we’ve come to describe as beleaguered, one of the country’s leading mortgage franchises, Blue Sky Financial reports today that over eight thousand potential buyers have signed up to its recently launched “Rent to Buy” Register and it estimates that in the region of sixty thousand people nationwide would have an interest in the scheme.

Speaking at the release of these figures, Charlie Kiernan, recently retired sales director with KBC Ireland and now a consultant to Blue Sky Financial stated that the response to the register had exceeded all expections. “We had targeted numbers in the region of three thousand, so a response of eight thousand is a staggering figure and it shows that our marketing campaign which used Google, Daft and Facebook as well as print media was very effective.”

Our research initially clearly identified that people are still willing to buy their homes, but they are not going to risk negative equity. So, we set about devising a solution heavily weighted towards assuring people that they would be protected if house prices should fall further,” said Kiernan.  The main features of the Blue Sky “Rent to Buy” Contract are that the price that will be paid for the proprty is today’s value, or, the value at a future date of purchase, whichever is the lower.  There is a 5 year option to purchase and most rents paid by the purchaser will be offset against the purchase price.

Blue Sky is urging all stakeholders including NAMA, banks, developers and government to push for a proactive inclusion of the “Rent to Buy” scheme and intends to approach these organistaions in the coming weeks. “Nobody is suggesting that “Rent to Buy” is the complete solution to the housing over-supply problem, but it can clearly form a substantial part of the solutiion”,  said Kiernan. “All interested parties should see that in the long run the Blue Sky scheme will actually serve to protect realistic property prices by improving occupancy rates. That’s the best news the housing market has had in ages,” he concluded.

“Those placing their names on the Blue Sky “Rent to Buy” Register will be assessed for mortgage qualification now,” said Paddy Greene, managing director of Blue Sky Financial. “Their suitability will be subject to continuous monitoring by us to ensure that they remain on tract to get their home loan as soon as possible.  It is vital that anyone wishing to register must prove suitable for a mortgage, as only those who do will be offered a property,” he said.

As empty new housing estates are becoming a common sight on the landscape, more and more developers are realising that ‘deferred purchase’ may be the only way to get occupancy levels up.  It is unlikely that activity levels in the housing market will experience any significant increase in the foreseeable future, particularly in the light of rising unemployment. With increased occupancy, developers will find it easier to sell their houses as well.

Several county councils have also shown interest in this solution as they seek to off-load properties acquired by them under the affordable housing scheme. Many of these houses were transferred to councils at the height of the boom and like all others their value have fallen even below cost.  The recent move by Dublin County Council will more than likely pave the way for the other councils to follow suit.

Greene explained that apart from demand for house buying which isn’t very strong currently, the overriding factor for the next two to three years will be funding.  “It is unlikely that available mortgage finance in Ireland will exceed €5bn per annum over the next three years. If you allow half of that to go to new properties then there is finance for about 10,000 units each year.  We have perhaps 300,000 units currently completed  so the maths tells us we need to find other options,” he said.

Blue Sky’s next phase will be marketing as a “Deferred Home Purchase Scheme” and developers  will be invited to offer their remaining units for sale through it.  Anyone wishing to register for the scheme is invited to visit www.blueskyfinancial.ie or contact any Blue Sky office nationwide on 1850 677 678.

If you can leave your repayment the same as you were paying before the rate decreased  then this will shorten the term of the mortgage. Many First Time Buyers took their mortgage over forty years with a view to reducing the term when the time was right. The time is right NOW!!!  Increasing repayments by around €100 per month can knock up to 5 years off your mortgage term. Simply contact your broker or nearest Blue Sky Office and they will let you know what difference any increased payment  can make but………DO IT NOW!

Are you paying an interest only mortgage on your family home or investment property. Now could be the time to change to capital and interest. Remember most lenders will allow you to pay part interest only and part capital and interest. This will allow you to plan the eventual clearing of your loan within a definite time frame.

Does it bring a lot to the table?

Not really, as it is not offering anything that isn’t on offer from other banks except maybe the odd bad credit case may get through.

Basic criteria;

• The loan is provided by several local authorities for First Time Buyers who cannot get sufficient finance from a bank or building society.
• The max loan to 92% of purchase price or €285,000.
• The term is 30 years.
• Available for newly build houses only.
• Earnings must exceed €40,000.p.a.
• Applicants must be in permanent employment for at least two years. Self employed applicants must have two years certified accounts.
• Applicants must have letter of decline from a bank or building society.
• The loan is not available for affordable houses.

Those with a house to let will have to pay a new €200 per year tax.