Dáil Éireann Debate, Tuesday - 22 March 2022
246. Deputy Eoin Ó Broin asked the Minister for Finance the status of his Department's engagement with an organisation (details supplied) with regard to the status of bank debt versus State debt in the affordable housing scheme; and the implications for the taxpayer if the banks demand that their debt takes priority over the State equity share in cases of default by the home buyer. [14364/22]
View answerThe Affordable Housing Act 2021 laid the foundation for two new affordable purchase schemes: the first to be delivered via Local Authorities and the Land Development Agency, and the second a national 'First Home' shared equity scheme supporting purchases in the private market.
On the basis that the purchaser of a home will generally require a mortgage to secure a home, I can confirm that in the development of both schemes, the Department of Housing, Local Government and Heritage (DHLGH) is engaging with the Banking and Payments Federation Ireland (BPFI) and its members.
The First Home Scheme will be delivered via a strategic partnership between the State and participating mortgage lenders. Officials from my Department are assisting the DHLGH in relation to the development of the First Home Scheme.
Both of the affordable purchase schemes will use an equity support model to assist eligible purchasers. In the case of Local Authority Affordable Purchase, this equity stake will be equivalent to the reduction in price from the full market value of the home and the stake will be held by the Local Authority.
In the case of the national First Home scheme, the equity stake will be the funding provided to bridge the gap between someone's maximum mortgage and the price of a new home (within regional price ceilings).
It is envisaged that purchasers will use bank mortgages or the Local Authority Home Loan with these schemes, just as in any home purchase, so the equity stake will therefore rank behind whatever loan is secured on the property. This is because the equity support is not a loan, a second mortgage, or any form of 'State debt', so it cannot take precedence over the debt on the property.
