The Rebuilding Ireland Home Loan (RIHL) has been in operation since 1 February 2018 under the Housing (Rebuilding Ireland Home Loan) Regulations 2018. The low rate of fixed interest associated with the RIHL provides first time buyers with access to mortgage finance that they may not have otherwise been able to afford at a higher interest rate.
The scheme allows low-income first time buyers aged between 18 and 70 who cannot secure a mortgage from a commercial lender, to access sustainable mortgage finance that is designed to enable them to purchase a new or second-hand property, or undertake a self-build, within a suitable price range. Applicants must be in continuous employment for a minimum of two years (primary earner) or one year (secondary earner). For single applicants, the income limit is €50,000, rising to €75,000 for joint applicants. The maximum price range for the value of a house that can be purchased under the scheme is €320k in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow and €250k elsewhere.
Based on the competitive borrowing achieved by the Housing Finance Agency, local authorities can offer a first tranche of fixed rate annuity finance to eligible borrowers at rates of 2.0% and 2.25% per annum, for twenty five and thirty years, respectively. Placing ceilings on the value of properties that may be purchased and aligning the terms of the loan with the Loan-to-Value elements of the Central Bank prudential lending rules guard against possible inflationary impacts on the market.
Towards the end of last year I asked my Department to undertake a review of the scheme's operation. In carrying out the review, the Department has consulted with a number of local authorities, the Housing Agency and the Housing Finance Agency. The review also has regard to the views raised by public representatives since the scheme's commencement. In making any recommendations in relation to the operation of the scheme, the review must also take account of the need to ensure that lending issued under it is provided on a prudential basis, so as to protect the financial interests of both borrowers and local authorities.
The review has been submitted to me and I am currently examining it.
When the Rebuilding Ireland Home Loan was initially being developed, it was estimated that the drawdown of loans under the scheme would be approximately €200 million over three years. From the data collated on the scheme to date, the RIHL has proven to be more successful than initially anticipated, as a result of which, the scheme would require a further tranche of funds to be borrowed by the HFA in order to enable its continuation.
My Department is currently in discussions with the Departments of Public Expenditure and Reform and Finance with regard to the amount of a second tranche of funding for the scheme, which I anticipate, will be finalised soon. When these discussions are concluded, I will be in a position to make an announcement on the matter.
However, the scheme remains open and all local authorities have been advised to continue to receive and process applications up to and including the issuing of loans.
Separately, I have commenced the relevant provisions of Part 5 of the Housing (Miscellaneous Provisions) Act 2009 to provide a statutory basis for the delivery of affordable housing for purchase. I also signed regulations on 12 March 2019 under which local authorities make their Schemes of Priority, which provide the administrative framework through which affordable homes will ultimately be allocated under the scheme.
Prioritising geographical areas for operation of the scheme is informed by economic assessments which local authorities have completed in relation to the affordability issues in their areas. Delivery of affordable housing is to be supported using the Serviced Sites Fund (SSF) which will utilise a budget of €310 million to provide site infrastructure support to help make available approximately 6,200 affordable homes over the next three years. An initial 10 projects have been approved for €43 million of funding under the first call for proposals under the Fund. A second call issued on 9 April 2019, in response to which 30 submissions were received from 15 local authorities. These are currently being assessed by my Department and I intend to announce approvals under this second call in the coming weeks.