Tuesday, 5 November 2019

Questions (30, 1160)

Martin Heydon

Question:

30. Deputy Martin Heydon asked the Minister for Housing, Planning and Local Government the status of the allocation of additional funding for Rebuilding Ireland home loan applications from County Kildare; and if he will make a statement on the matter. [44687/19]

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Thomas Byrne

Question:

1160. Deputy Thomas Byrne asked the Minister for Housing, Planning and Local Government when funding will be allocated to Meath County Council for the Rebuilding Ireland home loan scheme; and if he will make a statement on the matter. [45190/19]

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Oral answers (8 contributions) (Question to Housing)

The Rebuilding Ireland home loan is a very good scheme for those on the lower end of the wage scale who get up early in the morning for work and who are looking to be able to purchase their own house and aspire to own their own home. Demand in Kildare is particularly high for this scheme. Will the Minister outline how much his Department has allocated to Kildare County Council for loans to be allocated under the Rebuilding Ireland home loan, the initial amount granted, and if any subsequent top-ups have been given to Kildare County Council for the Rebuilding Ireland home loan?

I propose to take Questions Nos. 30 and 1160 together.

When the Rebuilding Ireland home loan scheme was initially being developed, it was estimated that the drawdown of loans would be approximately €200 million over three years. This loan product, however, has proved to be more successful than initially anticipated. In the context of the scheme’s success, my Department engaged with the Department of Public Expenditure and Reform and the Department of Finance about the allocation for 2019.

I engaged early, as I said I would. While discussions commenced in October 2018 on additional funding, the first tranche of €200 million was only fully drawn down in August of this year. My Department wrote to all 31 local authorities on 15 August this year sanctioning an additional €363 million in funding for the Rebuilding Ireland home loan. This brings total funding for the loan scheme to more than €563 million for 2018 and 2019 combined.

Kildare County Council’s total allocation for the period 1 February 2018 to 31 December 2019 has been increased to €20.9 million. The allocation for Meath has been increased to €35.8 million for the same period. These overall allocations incorporate loans already issued since the inception of the scheme, loans that will be drawn down on foot of approvals already issued, and projected loan demand for the rest of 2019.

Kildare County Council gives six months for approved applicants to draw down their allocated loan under the scheme. If it has not been drawn down within the six-month period, the money is then recycled and given to the next applicant in the queue. There is a big issue also in the length of time people must wait after they have applied. It is very difficult to rent and to save for a deposit at the same time. If a person gets the allocation, he or she has just six months to find the right house to seal the deal.

I have also encountered the issue where there are multiple applicants, especially in Kildare and I am sure in the greater Dublin area, Meath and Wicklow also, who apply to several county council lists for the Rebuilding Ireland home loan. Has the Minister considered a national register where the Housing Finance Agency could act as an overarching body so that when a person has applied in more than one county and is allocated the funding in one county, he or she could then be knocked off the other lists? This could give the opportunity to other people in Kildare who are also waiting on the list. Currently, it can take six months for it to become apparent that the person who is in front of them on the list will not be drawing down that money. We need to get the money recycled quicker and get it back into the system quicker.

The six-month drawdown period for those who have received approval for the Rebuilding Ireland home loan is standard within the industry. I am aware there have been some delays at the processing stage and people wanting the credit committee of the local authority to meet again more quickly to get approvals turned around. The Housing Agency, which is the overseer in the first line for an approval or a decline, operates to very efficient timelines.

The Deputy makes a very good point, however, about the duplications in the system. A person can apply to different local authorities and as a result it can, for a period of time, give an uncertainty around the actual headroom that is left in the local authority in terms of the funding that has been approved or allocated from central government to the local authority. One of the things we have discussed with the Department of Public Expenditure and Reform is new reporting requirements for local authorities whereby they would have to report back each month to the Housing Agency so we can see where duplication might be happening where a loan has been drawn down. On an enhanced role for the Housing Agency or the Housing Finance Agency and the roles they already play in trying to manage duplications better, a national register is a good idea and is under active consideration at the moment by me in how we can further improve this very desirable low interest mortgage.

Kildare's figures are a good example of why such a measure is necessary. Of the €21 million the Minister has said is available to Kildare County Council to draw down, the council has asked the council members to approve only €15 million. This is because there has been a drawdown of only €10 million. It means there are an awful lot of people still waiting on a list who are now contacting my office. They want to get a Rebuilding Ireland home loan but are stuck in that system. Where there is duplication it would be very helpful to have some measures to deal with that.

The income limits for the Rebuilding Ireland home loan are €50,000 for a single person and €75,000 for a couple. I have dealt with a number of cases where a person in his or her 30s is a public servant or works in the public sector and might be high enough up the increment scale. It is not too hard to get just on or above the €50,000 threshold. One comes across very few banks, however, that are able to give mortgages to people in that space who are on less than €60,000. This means we still have a cohort - single people and couples - that are missing out between the Rebuilding Ireland home loan and what the banks are lending.

The Rebuilding Ireland home loan is a very good step in that direction, but if there was a review of those limits, a slight increase should be considered. While there is a maximum level allowed, perhaps consideration could also be given to a minimum level. That there is no minimum level for the local authority to bring in is a vulnerability in the scheme.

I will allow a short supplementary question from Deputy Ó Broin.

The Minister will be aware that one of the difficulties in Dublin is that the loans being offered are, on average, €200,000. My local authority of Dublin City Council offers €180,000. This is far short of the market rate.

One of the things we are being told by people who receive offers that are simply too low in the context of purchasing properties is that the information on the Rebuilding Ireland home loan website is confusing and does not outline clearly what the key criteria are. In fact, the calculator on the website can often give people an inflated sense of the loans they will be able to access. When they receive an offer, it is far below what the calculator indicated or they do not get an offer at all. The broad range of criteria applied to the home loan facility at the underwriting stage must be explained more clearly so that people do not go into it with unrealistic expectations of what they might be able to get. The issue is particularly acute in the larger urban areas.

I thank the Deputies for those follow-on questions. On the last point raised by Deputy Ó Broin, it would be an awful thing if couples were looking at homes on the basis of an expectation of a mortgage they were not going to get. That would kill their hopes and dreams right out of the gate. As a result, I will look at the issue as to whether the calculator and the credit committee are out of kilter.

Deputy Heydon asked me to examine the income limits. I will not be looking at them for the time being. The limits of €50,000 for an individual and €75,000 for a couple are in line with the other affordability requirements we are introducing. The Rebuilding Ireland home loan and affordable housing products are new and will be kept under review into the future but for the time being they are set. As to the example that was given with regard to people who might be just above those limits, it is very interesting to consider the banks. While the banks do not come under my remit, there is a question as to whether the latitude they have to make exceptions is being used with respect to higher earners. Surely, those exceptions should be made in respect of lower earners who actually need the help rather than given to the higher earners. I would like to have a bit more information about that, albeit the Central Bank and the banks themselves are independent of my Department. Where the banks have exceptions policies, they should ensure that exceptions are not only made in respect of high earners as that undermines the whole point of having a flexibility to make exceptions within the lending criteria.

Question No. 31 answered with Question No. 26.