Local Authority house loan conditions must be amended – Brendan Smith TD

The very low take-up of the Rebuilding Ireland Home Loan clearly shows that this Scheme is not working and the Minister must amend its conditions.

In the past Local Authority House Loans were much sought after and a sizeable percentage of first time homeowners got their loan through that Scheme.

The requirement to have a 10% deposit of the market value of the property is a very big demand on potential first time homeowners because of the rental costs today and the difficulty it poses for people trying to put a deposit together.

Another difficulty for people on low incomes and seeking housing is the failure of the Government to raise income eligibility limits to a realistic level for Council housing.  A review of income limits has been promised and promised but still no decisions.

Below recent Dáil replies on these important issues.

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For Written Answer on : 20/11/2018
Question Number(s): 658 Question Reference(s): 48036/18
Department: Housing, Planning and Local Government
Asked by: Brendan Smith T.D.
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QUESTION

To ask the Minister for Housing; Planning and Local Government his plans to lower the required deposit level for local authority house loans in view of the difficulties for potential applicants in achieving the required deposit; and if he will make a statement on the matter.

REPLY

The Rebuilding Ireland Home Loan is designed to enable credit worthy first-time buyers, who are unable to access a mortgage from a commercial lender to obtain sustainable mortgage lending to purchase a new or second-hand property. The low rate of fixed interest associated with the Rebuilding Ireland Home Loan provides first-time buyers with access to mortgage finance that they may not otherwise have been able to afford at a higher interest rate.

To support prudential lending and consistency of treatment for borrowers, a Loan to Value ratio of 90% applies to the Rebuilding Ireland Home Loan as per the Central Bank’s prudential lending guidelines. Therefore, in order to avail of the loan, applicants must have a deposit equivalent to 10% of the market value of the property.

Applicants must provide bank or similar statements (such as post office, credit union, etc.) for a 12-month period immediately prior to making an application, clearly showing a credible and consistent track record of savings. The cash savings should be no less than 3% of the market value of the property. Gifts are permissible up to 7% of the market value of the property, where their source is verified.

Given the need to administer the loan in a financially prudent manner, in order to protect the financial position of both the borrower and the State, I have no plans to reduce this deposit requirement.

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For Oral Answer on : 14/11/2018
Question Number: 98 Question Reference: 47079/18,
Department: Housing, Planning and Local Government
Asked by: Brendan Smith T.D.
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QUESTION

* To ask the Minister for Housing; Planning and Local Government if his attention has been drawn to the difficulties facing many families on low incomes that are ineligible for social housing due to the low income eligibility limits; his plans to improve the income thresholds in areas such as counties Cavan and Monaghan; and if he will make a statement on the matter.

– Brendan Smith T.D.
For ORAL answer on Wednesday, 14 November, 2018.

REPLY

The Social Housing Assessment Regulations 2011 prescribe maximum net income limits for each local authority, in different bands according to the area concerned, with income being defined and assessed according to a standard Household Means Policy.

The income bands and the authority area assigned to each band were based on an assessment of the income needed to provide for a household’s basic needs, plus a comparative analysis of the local rental cost of housing accommodation across the country. It is important to note that the limits introduced at that time also reflected a blanket increase of €5,000 introduced prior to the new system coming into operation, in order to broaden the base from which social housing tenants are drawn, both promoting sustainable communities and also providing a degree of future-proofing.

As part of the broader social housing reform agenda, a review of income eligibility for social housing supports in each local authority area, including Cavan and Monaghan, is underway. The Housing Agency is continuing to carry out the detailed statistical work, which will underpin this review on behalf of my Department.

The review will have regard to current initiatives being brought forward in terms of affordability and cost rental and will be completed when the impacts of these parallel initiatives have been considered.

 

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