Estimated final average cost of an affordable home under the new affordable purchase scheme

QUESTION

To ask the Minister for Housing; Planning and Local Government the estimated final average cost of an affordable home under the new affordable purchase scheme; and if he will make a statement on the matter.

REPLY

Arrangements for homes to be made available for purchase at a discount on open market rates are now provided for under the Affordable Dwelling arrangements and Part 5 of the Housing (Miscellaneous Provisions) Act 2009, which I commenced in June 2018.  As Deputies will be aware, provisions in Housing Acts and the Planning and Development Act 2000, relating to affordable housing were repealed in 2011 given house prices had halved in the period between 2008 and 2011.  

I signed regulations in respect of the making of a Scheme of Priority on 12th March 2019, and these were issued to local authorities on 22nd March 2019.  The purpose of a Scheme of Priority is to set out the affordable purchase arrangements at local authority level.  This includes the methodology that will be applied by local authorities to determine the order of priority to be accorded to eligible households in instances where the demand for homes under the scheme exceeds the number available.

Further regulations will be put in place over the coming months regarding income eligibility and other matters. When the operational procedures for the Scheme have been finalised, and before affordable homes are made available under the scheme, a programme of communication will be undertaken by my Department and local authorities.

In order to support the delivery of homes to buy or rent at rates which are discounted on open market prices, this Government has committed €310 million under the Serviced Sites Fund, from 2019 to 2021, to provide infrastructure to enable the delivery of some 6,200 homes. 

To date, I have allocated funding of €127 million, in support of 35 projects in 14 local authority areas, for infrastructure works that will see the delivery of almost 3,200 homes. The overall cost and the timing of delivery for these projects is contingent upon the completion of design, planning and procurement in the first instance, and local authorities are working to achieve delivery as quickly as possible.  I can confirm that the first SSF supported affordable homes will be delivered on a site in Boherboy Co Cork in 2020 and delivery across the country will increase incrementally on an annual basis thereafter.

The selling price of homes made available for purchase by local authorities will be influenced by a number of factors including the cost of each particular development, which can vary significantly from one site to another, and the housing type involved. 

Whilst the Central Bank’s macro-prudential rules must be applied to Banks providing mortgages to the purchasers of what will be private homes available under the scheme, the significant discounts of up to 40% of market prices, will mean that these homes will be available to individuals on moderate incomes who, would otherwise not be in a position to purchase their own home.  

In addition to making more affordable homes for purchase, using the 'Cost Rental' model, the SSF will also play an important role in making homes available for rent at levels which are significantly below market rates.  I have convened a working group within my Department, in conjunction with the Land Development Agency, the Housing Agency, and other expert bodies. This group is developing the policy framework for the broader Cost Rental model and examining how a sustainable financing structure can be established to commence delivery of units at the scale required to get this new category of housing off the ground. The work of this group is being assisted by a consultancy and research support that is being undertaken by the European Investment Bank on our behalf.

This work is being informed through two Cost Rental pilot projects, at the former St. Michael's Estate in Inchicore, and at Enniskerry Road in Dun Laoghaire-Rathdown. The latter of these has already commenced construction, supported by EIB funding, and the first homes are anticipated to come on stream from 2021.

In order to assist local authorities to progress projects that have been submitted under the Serviced Sites Fund, my Department hosted an Affordable Housing workshop last Thursday.  This workshop was attended by the 19 local authorities who were included in both the 1st and 2nd Serviced Sites Fund calls.

These new schemes are set in the context of significant moderation in the growth in house prices and complement other key Government affordability initiatives. Included among these are the Rebuilding Ireland Home Loan, under which over 1,000 loans had been drawn down by end June this year, and the Help to Buy Scheme, under which some 14,000 applications have been approved. In addition, the Land Development Agency's initial portfolio of sites will have the potential to deliver 3,000 affordable homes and the Local Infrastructure Housing Activation Fund (LIHAF) will support more than 2,300 affordable homes on mainly publicly owned lands, while 5,600 further homes will benefit from a LIHAF related cost reduction, some of which have already come on stream.

In overall terms, programmes are in place under which some 18,000 affordable homes or homes with a LIHAF-related reduction will be delivered. To date, 15,000 households have also been supported into more affordable homes under the Rebuilding Ireland Home Loan or the Help to Buy Scheme.