Dáil Éireann Debate, Wednesday - 18 October 2023
189. Deputy Louise O'Reilly asked the Minister for Housing, Local Government and Heritage if he is aware of any current schemes which may help second-time house purchasers to purchase second-hand homes; if Budget 2024 has provided for any such schemes; and if he will make a statement on the matter. [45663/23]
View answerThe Local Authority Home Loan is a scheme established by my Department which can assist the purchase of second-hand homes by individuals who have previously owned a residential property, in certain circumstances where the second-time buyers qualify under the Fresh Start Principle.
The Local Authority Home Loan is a Government-backed mortgage for creditworthy applicants who cannot get sufficient funding from commercial banks to purchase or build a home. It has been available nationwide from local authorities since 4 January 2022.
The loan can be used both for new and second-hand properties, or to self-build.
This loan is available for first-time buyers or Fresh Start applicants. Fresh Start applicants, as set out below, are persons who previously purchased a home but can qualify for the loan if they meet certain conditions.
The following categories of persons are eligible to apply for the Local Authority Home Loan under the Fresh Start principle:
• Applicant(s) who previously purchased or built a dwelling, together with a spouse, a civil partner or a person with whom he or she was in an intimate and committed relationship are eligible under the Fresh Start principle where this relationship has ended, and they have divested themselves of their interest in the previous property.
• Applicant(s) that previously purchased or built a residential property, but has been divested of this through insolvency or bankruptcy proceedings, are eligible to apply. However a separate assessment of creditworthiness will be conducted by the underwriters. This applies when the applicant has exited the insolvency/bankruptcy proceedings
To be eligible for a Local Authority Home Loan an applicant must meet the income eligibility, be of good credit standing and have sufficient repayment capacity to service the mortgage offered.
If a person applies for a loan, they will be subject to the same credit assessment process that applies to all applicants, which is carried out in accordance with the credit policy for the scheme. The Housing Agency provides a central assessment service to local authorities and credit checks are undertaken as part of that assessment process. This assessment calculates an applicant's mortgage repayment capacity. Income required to service outstanding debts cannot be used to repay a mortgage, so generally persons in this situation end up being offered a reduced mortgage amount.
The final decision on Local Authority Home Loan applications is a matter for the relevant local authority. 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 authority.
Funding of €250 million is available for 2023 and this was provided for again in Budget 2024. No changes were made to the operation of the scheme in Budget 2024.
