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Home Loan Scheme

Dáil Éireann Debate, Thursday - 12 November 2020

Thursday, 12 November 2020

Questions (221, 222)

Bernard Durkan

Question:

221. Deputy Bernard J. Durkan asked the Minister for Housing, Local Government and Heritage his plans to simplify access to Rebuilding Ireland housing loans in order to accelerate their availability and meet the housing needs of many couples; and if he will make a statement on the matter. [36106/20]

View answer

Bernard Durkan

Question:

222. Deputy Bernard J. Durkan asked the Minister for Housing, Local Government and Heritage his plans to address the issue of access to local authority loans for applicants whose income is in excess of the qualifying guidelines but vastly short of what is required to purchase a home on the open market; and if he will make a statement on the matter. [36107/20]

View answer

Written answers

I propose to take Questions Nos. 221 and 222 together.

This Department has policy responsibility for the Rebuilding Ireland Home Loan (RIHL), which operationally is delivered by the local authorities. The RIHL is targeted at first time buyers who wish to own their own home, have access to an adequate deposit and have the capacity to repay a mortgage, but who are unable to access a mortgage sufficient for them to purchase their first home. As part of the eligibility criteria applicant(s) must have received insufficient offers of finance from two mortgage lenders to apply for a RIHL. The loan enables credit worthy first time buyers to access sustainable mortgage lending to purchase new or second-hand properties in a suitable price range.

All local authorities are receiving and processing RIHL applications and are incorporating increased flexibility to accommodate applicants during the COVID 19 Pandemic.

To be eligible for a Rebuilding Ireland Home Loan you must:

- be a first-time buyer;

- be aged between 18 and 70 years;

- be in continuous employment for a minimum of two years, as the primary earner or be in continuous employment for a minimum of one year, as a secondary earner- some flexibility on this provision has been provided arising out of COVID-19 for applicants in receipt of the temporary wage state subsidy (TWSS) and pandemic unemployment payment (PUP);

- have an annual gross income of not more than €50,000 as a single applicant or not more than €75,000 combined as joint applicants;

- submit two years certified accounts if self-employed;

- provide evidence of insufficient offers of finance from two banks or building societies;

- not be a current or previous owner of residential property in or outside the Republic of Ireland;

- occupy the property as your normal place of residence;

- purchase or self-build a property situated in the Republic of Ireland of no more than of 175 square metres (gross internal floor area);

- or self-build a property which does not exceed the maximum market value applicable for the county in which it is located;

- consent to an Irish Credit Bureau check.

Eligibility is subject to submission of a complete RIHL application form and confirmation by your local authority and I have no plans to change these requirements.

The final decision on loan approval is a matter for the relevant local authority and its credit committee on a case-by-case basis. Decisions on all housing loan applications must be made in accordance with the Regulations establishing the scheme and the credit policy that underpins the scheme, in order to ensure prudence and consistency in approaches in the best interests of both borrowers and the lending local authorities.

Further information on the scheme is available on the dedicated website www.rebuildingirelandhomeloan.ie.

There are several other measures in place, apart from local authority loans, to support housing affordability.

The availability of the Help To Buy Scheme for first-time-buyers, which is a policy of the Department of Finance, offers additional assistance to purchasers of newly built properties. Further information is available from revenue.ie.

In Budget 2021, the total funding being made available for the delivery of housing programmes was €3.3 billion. From this sum, €468 million will be specifically provided to support housing affordability measures. This includes the Serviced Sites Fund, the Local Infrastructure Housing Activation Fund, the Rebuilding Ireland Home Loan and the Land Development Agency (LDA).

In addition to these programmes, and to deliver on our Programme for Government commitments to provide measures for good-quality housing to purchase or rent at an affordable price, €110 million was ring-fenced for a new national Affordable Purchase Shared Equity Scheme and a new Cost Rental Equity Loan facility to help deliver Cost Rental homes both of which will begin in 2021.

€75 million will be allocated to the affordable purchase shared equity scheme. I intend to target the scheme at first time buyers, who are seeking to buy a new home but who cannot quite secure the full mortgage amount to do so at the present time. Subject to the final qualifying criteria, the scheme would see the State take a limited equity stake in a property, in order to help more people meet the cost of buying a new home with their available mortgage.

To this end, significant preparatory work has already been carried out by my Department working primarily with the Housing Agency and the Department of Finance. Intensive engagement continues with key stakeholders informing the final detailed parameters of the scheme, as well as with home builders to seek to increase the output of new homes in response to the new scheme.

In addition, €35m has been allocated to the new Cost Rental Equity Loan facility to support Approved Housing Bodies (AHBs) to deliver Cost Rental housing at scale from next year. Added to the 50 Cost Rental homes that will be delivered in Enniskerry Road, DLR in Q3 2021, it will accelerate delivery in this new sector in advance of the Land Development Agencie's planned future output and the work of local authorities. This scheme will leverage the proven expertise and capacity of the AHBs, demonstrated in their development and management of social housing units.

The CREL scheme will see financing made available to AHBs on favourable terms to cover 30% of the costs for Cost Rental homes. CREL funding will be provided on similar terms terms to the existing Capital Advance Leasing Facility (CALF) model which is extensively used by AHBs for social housing. In terms of the remaining 70% of capital costs, subject to appropriate conditions, it is anticipated that long term competitive financing will be made available to the AHBs by the Housing Finance Agency. This will allow cost-covering rents to be set at a lower level and so making them more affordable for tenants. Further details on the scheme will be announced in due course.

I intend to bring forward any necessary provisions to underpin these schemes in a forthcoming Affordable Housing Bill.

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