I thank the Senators for the amendments. I believe amendment No. 8 is still live and has not been withdrawn. I have a couple of things to say about amendments Nos. 8 and 9. It is good that these matters are being teased out and I know they formed a significant part of the Committee Stage debate. I am going to give a more detailed response for the record of the House. Senator Cummins made the point that to follow the proposals in the new section 10(9)(b) proposed under amendment No. 9 would mean excluding people from affordable housing. I want those in the lower 40% to be able to access affordable housing. I want those in the lower 50%, 60% and as many people as possible to be able to get into affordable housing. I do not mean it in any derogatory way, but including a crude definition of affordability and an arbitrary percentage, while the amendment is obviously well-intentioned, would actually exclude a massive cohort of people who need access to affordable housing. I know that is not something Senator Boyhan wants to do.
I am not sure of the thinking of the groups advocating for this. I want broader eligibility and criteria for people out there. Tens of thousands of people cannot access housing or buy homes at an affordable rate. Some people may think that people with combined gross incomes of a certain level do not need affordable housing. Sinn Féin's original proposals would mean a couple on a gross income of €75,000 would be unable to access the scheme. The reality is that while some parties or individuals might think a gross, combined income of €75,000 makes that couple wealthy, in real terms and in the reality of Ireland, it certainly does not. They are the working people for whom we need to ensure affordable housing is available. Amendment No. 9 would restrict in a significant way the number of people who could access the affordable housing scheme. That is not something I could countenance. I do not think Senators Boyhan, Keogan or Norris intend to do that but that would be the effect of the amendment.
It is important that I explain, in response to the Senators, including Senator Higgins, that there is a desire among some people to include an absolutist indicator of what is affordable. There is little academic support for that because it must include flexibility, particularly in a country such as Ireland which has an acute affordability problem where people cannot access housing. The definition must be as broad as possible. Assessing affordability and the financial constraints on households cannot be identified by rules of thumb or by asking how much is too much. It is more appropriate to ask how much is too much for whom and in what circumstance. It must be targeted at the circumstances of an individual or couple and we must ask what is affordable for them. That is why this idea of a 35% affordability cap that we will debate further down the line, or the proposals in amendments Nos. 8 and 9, will restrict the scope of the affordability measures. The Government and I have structured, and will structure, the legislation and regulations that underpin it to define how much is too much for whom and in what circumstance.
It is focused particularly on the applicant. As has been stated by my colleague, the Minister of State, Deputy Peter Burke, and me previously, the regulations that will be made under section 10 will effectively specify that a person cannot afford a unit if he or she is unable to obtain a mortgage from a bank or a financial institution for 90% of the market value. That is far better than the provisions in amendments Nos. 8 and 9 because it is far broader and allows more people in. It means we can help more people, which is what the Government wants to do. What a number of Senators may not appreciate or acknowledge is that it is not appropriate, and I do not mean this in a dismissive way, to take a one-size-fits-all approach. That will not work. There are different affordability thresholds and different levels in different parts of the country. Senator Cummins has dealt with the charge about the price cap, which is a different thing. However, they are caps, not targets.
There are different prices for different types of homes in Dún Laoghaire, south Dublin, north Dublin and Longford; there is not just one price. One does not set a price and say that everybody in the area must pay €400,000, for example. That is not what is being done. That has been a purposeful misrepresentation by some, although not by the Senator who made it and I am not suggesting he has, to try to scuttle the scheme before it has even got off the ground. However, we have stuck with it. What we propose will assess and define affordability by household and will accommodate each eligible household’s particular family need and financial circumstance. That must be far better; Senators must understand that this is far better than some arbitrary percentage or, even worse, under amendment No. 9 singling out a cohort of people by saying: "Your are in the bottom 40% so here are your houses". I doubt that Senator Boyhan would want that to be the case. It is something that none of us could support.
Amendment No. 8 seeks to amend section 10, which deals with eligibility criteria. I cannot accept it for the reasons I have outlined.
I have covered amendment No. 9. I cannot accept it. While I understand that both amendments are well-meaning, they would have serious consequences for the scheme. Whether they are intended or unintended consequences, and I take it that they are unintended, if the amendments were passed, they would greatly restrict the scheme. We want to focus on where an applicant is unable to purchase the dwelling at market value because she or he is unable to secure a bank or financial institution mortgage for 90% of the market value. The equity share to be taken by a housing authority, be that through the serviced sites fund, shared equity or, in this instance, the affordable fund, will bridge the gap between what the applicant can borrow under the current macro-prudential rules of 3.5 times the income and the market value of the dwelling. A couple could have an income of €100,000 and 3.5 times that is €350,000. The house price might be €390,000 and the couple might have a deposit of €30,000. That amounts to €380,000 and they would seek an equity stake of €10,000. The equivalent percentage would be what the State would take in. That would apply in that case. On the direct build affordable, as Senator Fitzpatrick said, we have launched schemes, coincidentally in my constituency in Lusk, north County Dublin, starting at between €165,000 and €265,000, where the local authority takes the equity stake through the serviced sites fund. I wish to clarify that for Senator Warfield as he asked that question earlier. That is how it works. It is not just the land cost, but the serviced sites fund contribution that is made. The equity stake is then taken in the home, but the sale price is between those two figures.
We can look at how the serviced sites fund is being used in the largest affordable, social and mixed development that has been passed in recent times by the main Government parties at local authority level, which is the 1,200 homes in Donabate. Some 238 are social, 238 are affordable and 150 are cost rental. Again, the serviced sites fund is funding the reduction in the sale price to ensure it is affordable, but the local authority is taking the equity stake. Basically, 650 families will have affordable purchase, cost rental and social homes delivered through that scheme. It was supported, to be fair, by Fianna Fáil, Fine Gael and the Green Party and opposed by other parties of the left, unfortunately, but, significantly, it was passed by 31 to nine. There will be many more of these. That is why the changes we are bringing forward in the Bill are absolutely necessary.
I will return to the affordability issue.
It is crucially important that this is subject to the fact that there will be a minimum price below which the housing authority cannot sell the dwelling for, having regard to the cost of delivery or acquisition.
From a financial sustainability perspective, no applicant will be required to borrow more than she or he could obtain under the Central Bank's macroprudential rules. That is affordability. That is absolutely ensuring it and the other piece is not a second mortgage but an equity stake, so it is not debt led. Even if he or she is taking out a Rebuilding Ireland home loan and could borrow more than that, that would also apply. It is important to note that the effect of the macroprudential rules is that mortgage repayments are, generally, very considerably less than 35%.
The reason I am reading this piece into the record in some detail is because there are many other amendments that Senators will come to as they move forward. I want this information on the record of the House.
Based on a mortgage of 3.5 times gross income repayable over 30 years at an interest rate of 3%, the repayments as a percentage of net income for a single person would be 21.4% at a gross income of €35,000, 23.3% at a gross income of €45,000 or 24.8% at a gross income of €55,000. For a couple with two incomes, the repayments on such a mortgage as a percentage of net income would be just over 20% at a gross income of €50,000, just under 21% at a gross income of €60,000 and 21.4% at a gross income of €70,000. Accordingly, the amendments proposed under this part with regard to purchases of affordable dwelling to the effect that people should not spend more than 35% of net income on housing costs are not necessary in the vast bulk of these instances.
I have already covered the new section 10(9)(b) in relation to the 40%. The Senator may wish to look at that himself and may withdraw the amendment on that basis. I do not think any Senator would want to restrict an affordable scheme to just a particular cohort of people. I hope that has covered everything.