Be Igloo: If it really wanted to, the Government could come up with better solutions than the "First home" program

Three months after the launch of the First Home program, it is safe to say that most of the contracts signed involved old apartments, the price of which revolves around the maximum amount covered by the guarantee offered by the state. Managers of Be Igloo, the division responsible for selling the apartments owned by Norwegian fund România Invest, feel that the initiative of the Government is welcome but insufficient.

In a press release sent to our editors, the company said it would follow a two-pronged approach: it would provide funding to its customers through its internal resources, exceeding the amount guaranteed by the Government and it intends to wait until buyers who sold their old apartments eventually buy newer ones.

Nimrod Zvik, marketing director of the sales division of România Invest, Be Igloo, said: "Judging by the current state of the "First Home" program and by the number and size of the transactions which occurred, it looks like it only encourages buying older apartments. We are hoping that this initiative is just the beginning, because people who sell their old apartments will eventually move into newer ones. Therefore, in the long run, the "First Home" program will help the market for new apartments".

He added that Be Igloo has been operating with a plan fit for crisis conditions since the beginning, by offering discounted prices and financing products, tailored to the needs of each customer, by betting on the idea that adaptability to the customers" needs will help sell the new apartments in the company"s portfolio. The official of Bee Igloo added: "This helped us sell newly built apartments as planned. At the same time, we are happy to see any measures which help remove the deadlock of the real estate market, even if it is tailored for old apartments, because if that specific market works, after a while, so will the market for new apartments".

The drawback is that new homes are more expensive than older ones, and the Government should take additional steps for stimulating sales and unfreezing the market for new projects. Nimrod Zvik said: "The Romanian government needs to have accurate information about the real price of an apartment in Bucharest - approximately 100,000 Euros. We do not advise people to buy apartments under unclear terms, we do not encourage young people to live in old apartments and we would not advise undermining the weight of the construction sector in Romania"s GNP". Mr. Zvik said that there are plenty of measures the Government could take to stimulate the market for new constructions, but that the Executive is delaying making decisions.

According to Be Igloo, the advantages of the "First home" program include: the availability of lower interest rate loans, the reduction of the early loan reimbursement fees, the cut of the required downpayment to just 5% of the amount guaranteed by the state, the 30% cut of notary fees for homes acquired through this program, and the cut of the VAT to 5% for the first purchase of a home.

The weak points of the program, include: the mandatory 150 Euros property evaluation fee, which must be paid regardless of whether the loan application is approved or not, as well as the bureaucracy which increases the time it takes for applicants to find out whether they qualify for the program or not. People buy an apartment based on the money they have available, the traffic in the area, the availability of parking spots, the quality of neighbors and of the construction materials used. As the maximum amount guaranteed by the state under the "First Home" program is 57,000 Euros, very few people will afford to buy new apartments.