The biggest hurdle to homeownership

For many first-time buyers, the dream of owning a property is not lost at the loan application stage. It is lost much earlier, at the question of whether they have enough saved to cover the upfront costs that banks typically do not finance.

Alongside costs such as notarial fees, insurance, and architect fees, the deposit remains one of the most significant.

Household expenses, student loan repayments, rent, and the cost of further education, among others, all make it difficult for prospective buyers to accumulate the savings required before entering the property market.

This challenge has become increasingly recognised by governments across Europe, with many introducing targeted measures to help first-time buyers manage this upfront burden.

Malta’s approach

The Housing Authority’s 10 per cent Deposit Scheme is a strong example. It is designed for people who qualify for a home loan but have not yet saved the deposit typically required at the promise of sale stage.

Through this scheme, participating banks provide an additional personal loan to cover the deposit, with the Housing Authority covering the interest on that loan. The personal loan is repayable over 25 years, though applicants may choose to repay it earlier.

How other EU countries compare

Portugal and Spain have introduced comparable measures. Portugal’s Public Guarantee initiative targets buyers aged 35 and under, with the Government acting as a guarantor for up to 15 per cent of the property value. This enables banks to finance up to 100 per cent of the purchase price, removing the need for an upfront deposit. The guarantee remains in place for 10 years, after which the buyer assumes sole responsibility for the debt.

Spain’s ICO First-Home Guarantee Line operates on a similar basis, covering up to 20 per cent of the loan amount and up to 25 per cent in certain cases, which banks would not typically finance through a standard mortgage. Aimed at individuals under the age of 35, as well as families with dependent children, the scheme enables buyers to obtain financing covering the full purchase price, thereby addressing the deposit barrier.

Other EU countries adopt different approaches. For example, Ireland’s Help to Buy Scheme offers eligible first-time buyers a tax rebate of up to 10 per cent of the property value, capped at €30,000, based on Income Tax and Deposit Interest Retention Tax paid over the four years before the application. This rebate can be used to fund the deposit either fully or partially, with the buyer covering any remaining balance.

A shared goal

Although these initiatives differ in design, they share a common aim: ensuring that the path to homeownership is not determined solely by a buyer’s savings at a single point in time.

By easing upfront cost barriers, including the deposit, and reducing the financial burden associated with purchasing a property, governments are sending a clear signal that first-time buyers may require additional support to enter an increasingly challenging property market, especially in the context of rising property prices across EU countries.