Ground-breaking 'housing plan' offers relief for first-time buyers and struggling tenants

HELP is finally at hand to get young adults onto the housing ladder – grants of up to €10,800 will be available to anyone up to the age of 35 inclusive to use as a deposit and fees.

Where the property is particularly cheap, however, the grant will be capped at 20% of the sale price.

Banks have tightened up mortgage-lending criteria since the start of the financial crisis meaning that, despite housing being more affordable than ever outside the major cities, they remain out of reach to first-time buyers who, even if they are approved for a home loan, will typically only ever be offered a maximum loan-to-value of 80%.

For a small, but comfortable and modern apartment suitable for a couple or small family outside of a metropolitan area, which could be on the market for as little as €50,000 to €80,000, this could mean finding a 20% deposit of between €10,000 and €16,000, despite interest rates being at their lowest-ever in the Eurozone and not predicted to rise in the foreseeable future.

On top of the deposit, first-time buyers will, like all property purchasers, have to find 12.5% of the sale price to cover fees and legal expenses.

The end result is that a cheque for €10,800 to get them started will be a godsend.

And they will be able to claim it any time between 2018 and 2021 as part of the State Housing Plan, says minister of public works Íñigo de la Serna.

The cash is not only for first-time buyers and is not means-tested – the only prerequisites are for the applicant to be 35 or under and the property to be a main residence.

Many young adults at present still prefer to rent, since limited financial knowledge and media coverage of repossessions means they distrust the idea of 'getting into debt' and do not see a mortgage as a long-term investment.

Others prefer to rent because they do not want the commitment of a mortgage if they do not feel secure in their work; if they are living away from their home area for a job but hope to return one day, or for any other reasons simply want to hedge their bets.

Rent prices in the provinces, even in large towns, are at their lowest-ever, but in major cities where the most jobs are found, they can be prohibitive and even exceed the average monthly wage.

Madrid's mayoress Manuela Carmena has already announced measures to contain upwardly-spiralling prices, and De la Serna's State Housing Plan will offer additional breathing space.

The maximum annual benefit to help with rent, currently €600 or €50 a month, will now rise to €900 or €75 a month.

And where tenants are in extreme poverty, disabled or have had their homes repossessed through redundancy, or sickness preventing them working, they will be able to claim between €150 and €400 a month towards paying their rent.

Of this, 80% will come from the central government and 20% from the regional governments.

Although initially this new housing benefit will only be for two years, De la Serna says it is 'perfectly possible' to renew them for another two years if the social services in either the town or the region believe it necessary.

Further measures in the State Housing Plan include making it easier to obtain home improvement, renovation or repair loans from mortgage providers.

The full plan drawn up by the ministry of public works will be handed out to the country's 17 autonomously-governed regions by May 30, and these federal governments will be asked to give their feedback and make any proposals for amendments they consider necessary.