Minister for Housing, Local Government and Heritage, Darragh O’Brien has today [20th January 2021] published the Affordable Housing Bill 2020.
The Bill provides for the introduction of three new schemes delivering on the Programme for Government commitment to put affordability at the heart of the housing system and prioritise the increased supply of affordable homes. These schemes will see:
The final details of the Affordable Purchase Shared Equity scheme are being advanced based on engagement with stakeholders and it is intended that when finalised it will be open to all new build homes, subject to regional price caps and targeted at first time buyers.
Minister O’Brien said, “This is the first affordable housing scheme of its kind in Ireland. It is a specific and targeted measure to mitigate the affordability challenges faced by young working people, many of whom are caught in a rental trap.
“The scheme will increase housing supply as it helps to improve viability by bridging the gap between the maximum mortgage that might be available to a household and the actual cost of a new home for ordinary income families. In Budget 2021 we have put aside an initial €75m for 2021 to start the scheme up and will boost this with additional private investment.
“As a matter of course, when progressing a new scheme such as this, consultation takes place to examine potential range of consequences. My Department continues to work closely with stakeholders including partners in Government, the Housing Agency, pillar banks and our colleagues in the European Commission to advance this legislation,” he said.
When finalised, the scheme will accommodate appropriate control mechanisms and it will be in accordance with Central Bank rules. Development of the scheme is informed by international practice for example in the UK where its scheme has increased supply by 14%. There is no obligation to repay the loan after a certain point until the house is sold but it will make financial sense for the owner to pay down the equity stake.
Minister O’Brien added, “Comparable schemes have not led to any significant increase in house prices. According to the Independent National Audit Office, the scheme in the UK increased housing supply by 14% and inflation by 1%.
“Assuming that potential buyers are currently renting this support will save them up to €11,000 per year in rent and in the long term save the state rental support payments.
“In addition to the affordable purchase schemes, the Bill for the first time, defines ‘Cost Rental’ as a new form of tenure and places it on a statutory footing. This legislation provides the basis for the first cost rental homes in the State which will be delivered in 2021 with many more in the pipeline in the years thereafter.
“A ‘Call for Proposals’ to AHBs for the delivery of approximately 400 Cost Rental Homes, to be made available at a minimum 25% below open market values, has already been issued. Resulting homes will be used for Ireland’s first Cost Rental tenancies, a new sector of the rental market in which tenants pay rent that covers the costs of delivering, managing, and maintaining the homes only,” concluded Minister O’Brien.
Notes:the Affordable Housing Bill 2020 is available here.