Panayiotis Rougalas
Marie Antoinette, Queen of France, urged the poor of France to eat cake because they had no bread. And every now and then, some of the Government’s housing schemes make me quietly whisper “cake” to myself and smile.
The Government introduced two new schemes a few days ago. The first allows people to build an additional floor on an existing home to house family members. The second provides state-owned plots to families that meet certain criteria. According to the Ministry of Interior, “the common philosophy behind both is to make better use of the opportunities that already exist, so that they can be turned into more affordable housing options for citizens.”
Once again, we are watching the same show. It has become clear that the Government cannot create schemes that actually address the needs of the middle class. Instead, it comes up with schemes that have little connection to reality and spends money on people who could, in many cases, have gone ahead with some kind of purchase without government assistance.
Take the first scheme, which concerns the construction of an additional floor on an existing home. It is aimed at people who already have somewhere to live. In practice, they are asking the Government for its blessing to build another floor, so they can do it legally, using money they or their parents already have.
This is not a scheme for people who genuinely need a place to live. It is for people who already have a “roof over their heads” and simply want to live almost “semi-independently” by building a home, with help from their parents or in-laws, on top of their parents’ or in-laws’ house.
Is this how we solve the housing problem?
Then there is the second program, involving 570 plots of land that will be offered at 25% of their market value. There are annual family income limits, and here they are: couples or single-parent families earning up to €45,000, three-person families earning up to €50,000, four-person families earning up to €55,000, and families of five or more earning up to €65,000.
These limits have little connection to reality.
It is clear that these limits were drawn up by people who do not understand what it means for a couple to live on that amount of “clean” annual family income while also supporting a child. Do they really believe these people can walk into a bank, get approved for a sustainable loan, and then build a house?
A house that, these days, costs at least €200,000 to build if you are talking about 100 square meters?
Do the experts who designed this scheme really believe that this couple has at least 20% of that amount sitting in the bank so they can qualify for a loan of this size?
And where are they supposed to live while all of this is happening? Are they supposed to pay rent at the same time?
The cost of building a house is not just the loan. There is the furniture. There is the tax paid to the state when the property is acquired, which is 5% for a first home. And then there is the cost of buying 25% of the value of the plot itself.
In the end, the parents will once again have to reach into their pockets and provide substantial financial help with both the purchase of the plot and the construction of the house.
So if these people already need help from their parents or in-laws, do they really need an extra push from the state?
I have written about this in previous years, and I will probably be writing about it again every year. These schemes seem to be designed by people who do not understand what it means to face a housing problem, or who simply cannot grasp what that problem actually looks like in real life.
They are people who studied “business administration” without ever setting foot inside a business, let alone actually running one.
