Shared Equity is an arrangement where the government or local council agrees to take a share of your home, so that you can qualify for a smaller loan amount from the bank. So instead of giving you a bigger mortgage, the State or council:
- Contributes part of the purchase price
- In return, takes a percentage ownership of your home (for example, 10%, 20%, or 30%)
- That percentage is tied to the market value of the home, not the original cash amount
You are usually expected to:
- Live in the home as your principal private residence
- Pay no rent on the State’s share (in most Irish schemes)
- Repay the equity when you sell, refinance, or buy it out
A Simple Example
- House price – €400,000
- Your mortgage + deposit – €320,000
- State equity stake (20%) – €80,000
If the home later sells for €500,000:
- The State gets 20% = €100,000
- You keep €400,000 (minus any mortgage balance)
If the value falls to €360,000:
- The State gets 20% = €72,000
- So they share the loss with you
The 3 Main Equity Schemes in Ireland include:
- The First Home Scheme – This is Ireland’s foremost national shared equity scheme, which allows first-time buyers only to buy newly built homes at a reduced price.
- Local Authority Affordable Purchase Scheme – Under this scheme, local Authorities will sell newly built homes at a price lower than the open market value. You do not need to be a first-time buyer to qualify for this scheme.
- Incremental Tenant Purchase Scheme – This scheme allows eligible local authority (council) tenants buy their social home at a discount. To find out more, visit the website of your local council to find out more.
The Main Benefits of Shared Equity Schemes
1. Lower Deposit and Mortgage
You borrow less from the bank, which means:
- Smaller monthly repayments
- Better mortgage approval chances
- Less exposure to interest rate rises
2. Access to New, Better Homes or Locations
Without equity support, buyers might be limited to:
- Smaller homes
- Poorer locations
- or Renting indefinitely
Equity schemes can make new builds or family homes more achievable when compared to market rates.
3. No Monthly Rent
Unlike shared ownership in some countries:
- Irish equity schemes do not charge rent
- The State waits for its money until resale or buy-out
4. The State Shares Market Risk
If house prices fall:
- The State absorbs its percentage of the loss
- You do not carry 100% of the downside
This matters in volatile markets.
The Hidden Disadvantages of Shared Equity Schemes
This is where many buyers get caught out.
1. Capital Gains are Shared with The State
Just as the state shares any losses with you, if house prices rise sharply:
- The State benefits alongside you as you do not get to keep all the capital gain
This can feel frustrating in a strong market.
2. Selling or Refinancing Is More Complex
Because the State is a co-owner:
- Selling your home require additional approvals
- Refinancing your home can be much slower
- Buy-outs must follow strict rules and valuations
All of the above adds administrative friction.
3. Buy-Out Can Be Expensive Later
You buy out the State at current market value, not what it originally paid.
If prices rise significantly:
- Buying out later can be far more expensive
- Some owners never fully staircase to 100%
4. Restrictions on What You Can Do
Depending on the scheme, you may face limits on:
- Renting out the property
- Short-term letting
- Using it as collateral for other loans
- Making major alterations without consent
You own the home but not with full freedom.
5. The State Has a Say in Resale
Some schemes:
- Restrict who you can sell to
- May require resale at an “affordable” price, and not the market price
- or give the council first refusal
This can affect the speed and flexibility of the sale, as well as final proceeds.
6. Psychological Disadvantage (Often Overlooked)
Many owners underestimate the emotional impact of:
- Knowing you’re not the sole owner
- Feeling like the home is “conditional”
- Uncertainty around future rules or policy changes
For some people, that matters more than the money.
Who is a Shared Equity Scheme Good For?
Shared equity is best suited to:
- First-time buyers priced out of the market
- Buyers actually planning to stay long-term in the home, ie 20+ years
- Households that prioritise stability instead of speculation
- People comfortable with shared profits and losses
Shared Equity is less suited to:
- Short-term movers
- Investors
- Buyers relying on future capital gains
- People wanting full control over their property
An equity stake reduces risk and cost today, but limits flexibility and upside tomorrow.
