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Monday, 13th Oct, 2014
IPAV calls on Central Bank to review Deposit Requirement

If new lending curbs were to insist on 10pc deposits rather than the 20pc contained in the new proposals from the Central Bank, the measures would have far less distorting and unfair consequences for potential buyers, the Institute of Professional Auctioneers & Valuers (IPAV), which
represents almost 1,000 auctioneers nationwide said today.
The organisation’s Chief Executive, Pat Davitt, said if the requirement remains at 20pc it will put home buying out of the reach of many who are currently planning to buy their first home.
“If the proposed measures, which the Central Bank says are not designed to steer or limit house prices but to restrict lending, 10% should be effective. In the event that it wasn’t effective it could be increased,” he said.
“The proposed measures will militate against first time buyers whose parents are less well off and not in a position to assist with such a large deposit requirement.
“Those who are currently paying rent will also be hit hard because they have a lesser capacity to save by virtue of the fact that they are paying rent. And now there will be more competition in the rental market.”
Mr Davitt also said the income multiple should be assessed on a net usable rather than gross income basis.
He said the difference between a 20pc deposit requirement and a 10pc deposit requirement is substantial. At 20pc a house costing €200,000 would require a deposit of €40,000 while at 10pc it would be “a far more manageable €20,000.”
He said his organisation believes that introducing stringent curbs on lending at a time when lending is by no means exuberant and is in fact very subdued are premature. “January 2015 is too early, it does not give people who are actively in the market sufficient time to plan. It will only serve to cause panic, these measures should be phased in.”
He said there is a severe shortage of suitable homes for purchase in the Dublin area. “This is the problem that should be addressed at policy level, not one that doesn’t exist, at least at present. The Central Bank proposals amount to taking a sledgehammer to crack a nut. We need a more measured response that would include mortgage indemnity bonds for example,” he said.
And he said IPAV wants to see the development of a sustainable housing market. “While we do believe the Central Bank needs to keep a very close watching brief and intervene if lending shows signs of heading into danger territory, this is not the situation now and it is in our view completely unreasonable to expect first-time buyers to come up with massive deposits.”