COMHAIRLE CONTAE ÁTHA CLIATH THEAS
SOUTH DUBLIN COUNTY COUNCIL

MEETING OF TERENURE-RATHFARNHAM AREA COMMITTEE (2)

Tuesday, November 11, 2008

QUESTION NO. 8

QUESTION: Councillor C. Keane

"To ask the manager to outline the differences in the new proposed affordable homes scheme as announced in the budget when compared to the last scheme for the Terenure/Rathfarnham area.  Also to state how it is going to be implemented by SDCC and to state if current applicants on this list stay with the current scheme and to state commencement date of new scheme?"

REPLY:

Home Choice Loan Scheme

As part of Budget 2009, the Government announced new measures to support first-time homebuyers.   These measures include the introduction of a new mortgage product called Home Choice Loan.  The Loan has been designed to provide a necessary response to a very particular set of circumstances which exist in the housing market at this time; namely, a lack of availability of sufficient credit for first-time buyers.  Home Choice Loan is not available to purchase a home under the Affordable Housing Scheme it is a market designed mortgage to provide access to credit for first time buyers who can afford to purchase on the open market and can afford to service a mortgage, but are unable to get a sufficient mortgage amount from a bank or building society.

Home Choice Loan will be available for a limited period of time under the provisions of Section 11 of the Housing (Miscellaneous Provisions) Act 1992, and will be subject to regulations made by the Minister. A Home Choice Loan fact sheet and Department of Environment, Heritage and Local Government circular is attached for your information.

Home Choice Loan will be available to first-time buyers of new properties subject to a maximum loan of €285,000, and a maximum loan to value ratio of 92%.  Homebuyers will avail of the Loan via appointed mortgage brokers.  The Loan will be processed through a centralised processing unit, and issued and administered on a regional basis via four Local Authorities (Dublin City Council, Cork City Council, Kilkenny Co. Council and Galway Co. Council). 

 Preliminary details of the product are available on www.homechoiceloan.ie and by calling LoCall 1890 252 842. Prospective applicants can register their interest via www.homechoiceloan.ie now, and the final details and arrangements relating to the loan product and broker network will be finalised in the coming weeks, with a view to its full introduction from early November.

Equity Loan Scheme

GOVERNMENT EQUITY SCHEME

A new single streamlined Government Equity product is to be introduced.  In the first instance, this will replace the current approach through which affordable housing is made available under Part V, the 1999 Affordable Housing Scheme and the Affordable Housing Initiative.

Its implementation will introduce greater equity into the system and provide a basis for achieving greater consistency across the schemes and across different areas of the country. 

In essence, the Government Equity Scheme would provide a single mechanism through which homes would be purchased by eligible purchasers under all of the schemes for supply of affordable housing (which would continue to operate unchanged as means of supplying affordable units). The timing of the introduction of an open market component of the scheme will be kept under review in light of developments in the housing market.

In the case of units provided through the affordable housing schemes (e.g. Part V and the 1999 Affordable Housing Scheme), from the buyer’s perspective, the purchase transaction under the new arrangements would be largely unchanged. However, instead of the property being sold subject to a reducing clawback, it would be sold subject to a permanent charge involving an obligation to repay an equity stake equivalent to the amount currently allowed as a discount (i.e. the percentage below the market value at which the property is sold). The various affordable housing schemes would continue to operate unchanged as a means of supplying affordable units.

The Government Equity would be registered as a permanent charge against the property, as a set percentage of the prevailing market value.  It would remain as a charge on the property until it is fully repaid.  The equity loan would be recoverable on sale of the property.

In the final phase, by enabling eligible buyers to access housing on affordable terms in the open market, the Equity Loan Scheme could replace the Shared Ownership Scheme, which currently enables eligible buyers to purchase a proportion of the equity in a dwelling (new or second hand) on the private market and to rent the balance from the local authority, which is bought out over time.  The issue of introducing this “open market” equity loan product will be kept under review in light of changes in the market.

The Equity Scheme is subject to the introduction of legislation  and as soon as the legislation is passed and a commencement order is issued  a start date  will be identified for the scheme.