The Minister for Housing, Planning and Local Government (the Minister) announced three new schemes to tackle Ireland’s housing and homelessness crisis on 22 January 2018. The purpose of these initiatives is to assist a number of people in the community who are not eligible for social housing but cannot afford to rent or buy their own home.

Government-backed Mortgages for first-time buyers

The first scheme announced was the Rebuilding Ireland Home Loan, which will be available from local authorities from Thursday 1 February 2018. This is a new Government-backed mortgage, which can be used by applicants to purchase new or second hand properties or to build their own house. The applicants can borrow up to 90% of the market value of the property and can chose a fixed rate of 2% – 2.5% interest for 25 – 30 years. The applicants have the security of knowing that their mortgage rate will not increase over the lifetime of the loan.

In order to qualify applicants must meet the following criteria:

  • Their annual gross income cannot exceed €50,000 for a single applicant or €75,000 for a couple.
  • The maximum market value of the property in Dublin, Cork and Galway must not exceed €320,000 or €250,000 in the rest of the country.

Other eligibility criteria will also apply, for example, applicants must demonstrate that they can afford the loan repayments and show at least two refusals of mortgages from two lending institutions.

Affordable Purchase Scheme

The second initiative is the Affordable Purchase scheme, which aims to assist people to purchase an affordable home in partnership with the State. The land on which the affordable property is to be built will be provided by local authorities at a reduced cost or no cost. This will enable the price of the property to be reduced. The State will retain an equity share in the house in proportion to the discount the purchaser received on the price of the property, which in turn can be used by the Government to invest in building more affordable homes. The purchaser can pay off the equity share interest free at a later stage. The aim is to provide at least 10,000 new homes through this scheme.

The same criteria regarding income and market value, which apply to the Rebuilding Home Loan applicants, will apply to the Affordable Purchase Scheme.

Affordable Rental Scheme

The third initiative is the Affordable Rental Scheme. It aims to make affordable homes available through a cost rental model, which will provide greater certainty on rent irrespective of changes in the market. The rent paid will cover the cost of building the property and any on-going maintenance and management charges with a small profit margin included.

The Minister has announced that a pilot scheme has commenced using publicly owned land in Dun Laoghaire – Rathdown, which is being developed in consultation with the Housing Agency and an approved housing body. It is expected that the pilot will go to the market later in 2018 to secure a development partner. The Minister also announced that he in discussions with the European Investment Bank about other affordable models, which could be used in Ireland.

Future of affordable housing in Ireland

The Minister has acknowledged that while a large amount of resources have already gone into addressing social housing needs, the Government needs to widen its focus to create a more affordable and sustainable housing sector. The Minister is hopeful that these three initiatives can help to reduce the financial burden and level of uncertainly for many people in the future.