Dáil Éireann Debate, Monday - 11 September 2023
885. Deputy John Brady asked the Minister for Housing, Local Government and Heritage if Homebond or a similar cover will be in place for purchasers of new affordable housing schemes through the local authority to cover any potential latent structural defects; if so, to provide details of the scheme; and if he will make a statement on the matter. [37825/23]
View answer892. Deputy Thomas Gould asked the Minister for Housing, Local Government and Heritage whether he is aware of issues with an affordable housing site in Montenotte, County Cork, that is leaving customers unable to progress with a mortgage from a major bank (details supplied); and if he will make a statement on the matter. [37967/23]
View answerI propose to take Questions Nos. 885 and 892 together.
The Local Authority Affordable Purchase scheme is a significant measure within the Government's overall commitment to deliver 54,000 affordable homes by 2030 under Housing For All.
Latent defects insurance (LDI) is generally obtained by developers through first party insurance products offered by a small number of providers, including Homebond and others, to cover structural defects which may become apparent during the cover period (typically 10 years). LDI is not a mandatory requirement for housing market purposes, although lending institutions and consumers are likely to, and often, demand it.
I understand that there have been a number of instances where during the conveyancing process the absence of LDI has been raised by a prospective affordable home purchaser following their discussions with their lending institutions. LDI cover is unlikely to be obtainable by a developer retrospectively where it is not in place in advance of the construction of a home. In such cases local authorities are prepared to work with the developer to identify a reasonable alternative solution such as a collateral warranty and in this way have enabled a number of lending institutions to proceed with loans. It is understood however that one lending institution has declined to proceed with loans in circumstances where an LDI policy is not in place.
The closing of the sale of an affordable home on its completion and delivery is a matter between the parties to the transaction, who include the individual purchaser, their mortgage provider, and the relevant local authority, together with their respective legal representatives. Similarly, the drawdown of loans is a matter for the purchaser, their advisers and the relevant financial institution.
While local authorities will continue to be available to assist individual affordable housing applicants and lenders on a case by case basis in any reasonable way possible, ultimately the decision to provide funding rests with the relevant lending institution.
