By James Ward, PA
New legislation will help to “bridge the affordability gap” for first-time buyers, the Housing Minister has said.
Cabinet unanimously approved the Affordable Housing Bill 2021 for publication at a meeting on Tuesday.
More than 6,000 homes will be built over the next four years under the scheme, Minister Darragh O’Brien said.
Today Cabinet approved the publication of the Affordable Housing Bill 2021.
Looking forward to progressing it through the Oireachtas now so that people can buy/rent an affordable home this year.
More info: https://t.co/8rfxjFABur pic.twitter.com/UZetEBaEQl
— Darragh O'Brien (@DarraghOBrienTD) May 4, 2021
He told reporters: “It is the most comprehensive legislation that has been brought forward for affordable housing.
“The shared equity arrangement, is going to give real hope to a lot of first-time buyers that are out there.
“For potential first-time buyers who can’t actually get into the market, to help them bridge that affordability gap.”
However, the bill has been heavily criticised by the Opposition, who claim it will drive house prices upwards and benefit big developers.
The bill aims to introduce affordable housing through a shared equity scheme with local authorities or Government.
It is available to first-time buyers, availing of their maximum mortgage entitlement, who are still unable to buy a home at its market price.
The legislation will require housing developments in every local authority area to consist of 10% social housing and 10% affordable homes.
The Affordable Housing Bill 2021 has been approved by Cabinet this afternoon.
The Bill includes two new options for affordable home ownership:
🔑 Local Authority Affordable Purchase
🔑 Shared Equity Affordable Purchase
Learn more about how these schemes will work here 👇 pic.twitter.com/VlacrKBAnK
— Department of Housing, Local Government & Heritage (@DeptHousingIRL) May 4, 2021
Buyers can use the Help to Buy incentive towards their deposit where their mortgage entitlement is 70% of the cost of a property.
Proposals under the scheme would see affordable housing price caps introduced at varying levels, based on location.
Among the highest price caps will be in the Dublin area, where they are expected to reach 450,000 euro.
Minister O’Brien defended this element of the Bill from Opposition claims that the caps would become “targets” for developers.
He said: “They’re caps, they’re not targets.
“There are different caps in different regions, because what’s affordable in one reason is not affordable in another.”
He said the scheme would see house-buyers pay no additional fees in the first five years and a “very small servicing fee” thereafter.
He added: “It’s not an additional debt.It’s not a second mortgage either.
“What we have set as the caps are prudent because they’re based on the prices in each of the areas. They are above them, because that allows for different house types.”
The legislation also provides for a “cost rental” scheme, where the rents charged are only enough to cover the cost of building and maintaining the home.
Where the scheme is oversubscribed, landlords will select tenants via lottery, according to the Department of Housing.
Landlords wishing to partake in the scheme must apply to the Minister and commit to it for a minimum of 30 to 40 years.
Members of the Opposition on the Oireachtas Housing Committee have heavily criticised the Bill.
They accused the Minister of rushing through its publication through before the publication of the Committee’s pre-legislative scrutiny report.
Sinn Fein, Labour and the Social Democrats accused Minister O’Brien of undermining the work of the Committee.
Sinn Fein’s Housing spokesman Eoin O Broin said the measures in the Bill will drive house prices up, as the caps in the Bill will become targets for developers.
He said: “You have to really be living in another world to think €450,000 is an acceptable cap for a so-called affordable home.
“What is actually going to happen is it’s going to push prices up to that €450,000, in Dublin city and in Dun Laoghaire/Rathdown.
“The problem with the caps is developers will now start to price those caps in.
“My big worry is actually it’s going to make it less affordable for people that are out there struggling.
“That’s of course if they can even get in to buy, because of the way in which Government policy is incentivising short-term, high-yield vulture funds to buy up those units.”