TWO OF the State's biggest property developers will today announce initiatives to assist buyers who find it difficult to put together deposits in a market where mortgages of more than 80 per cent are increasingly rare.
Bernard McNamara's newly completed apartment scheme at Elm Park in Dublin 4 has seen prices already cut by 20 per cent. Now the developer is offering interest-free loans of up to 30 per cent of the selling price to attract buyers for 70 of the 330 units.
In recent weeks two-bedroom units at Elm Park were listed at €585,000. Selling agent Hooke MacDonald is now offering them at €470,000 as part of the new initiative. Buyers do not have to put down a deposit, and only have to arrange finance on €329,000, with the developer looking after the balance. The zero-interest loan does not have to be repaid for five years.
Meanwhile, developer Ray Grehan of Glenkerrin Homes is offering a similar deal at his upmarket Grange development in Stillorgan, Dublin, in the hope of clearing up to 200 units.
Buyers in Glenkerrin's developments will have to pay a 5 per cent deposit, and will then be offered a deferred payment of 15 per cent by way of an interest-free loan to be repaid at the end of seven years.
The developer's loan is secured by way of a second charge on the property. The mortgage process will be administered by Savills HOK.
Mr Grehan said their approach should help "struggling buyers who can no longer secure high loan-to-value ratios like 95 per cent of the purchase price". His company is offering to "bridge the gap" between the amounts offered by lenders and the purchase price.
"There are two problems with this market - lack of money and lack of confidence," Mr Grehan says. "If we can provide one, we might be able to help the other. Sales have come to a halt because the banks will only lend 80 per cent and so people are having to come up with 20 per cent deposits. On a €300,000 property that's a €60,000 deposit and people simply do not have that money in savings."
The deal applies to all Glenkerrin's sites including Ballintyre in Dublin 14 and St Edmunds, a large starter home scheme in Lucan.
The incentives are being launched as banks take a more aggressive policy on development funds. The major financial institutions are now anxious that the large number of apartments and houses overhanging the market get cleared even if it means reduced profit margins for developers or even units being sold at cost rather than to allow them to remain vacant indefinitely.