Kieran O'Donnell (Limerick City, Fine Gael) | Oireachtas source

I welcome the amendment. I wish to speak generally on the area of affordable housing and the interaction with the help-to-buy scheme. The Minister's Department commissioned a report from Mazars to review the help-to-buy scheme. I have submitted a proposal that I ask be further reviewed by the Department. Under the local authority affordable housing scheme currently, there are discounts of between 15% and 40% on private houses, with the local authority taking an equity stake in the amount of the discount. However, as a result of the way it is applied, if the discount is above 22.2%, the purchaser no longer qualifies for the help-to-buy scheme because the loan-to-value ratio and the market value compared with the mortgage is below 70%. My proposal, in line with the recommendation in the report from Mazars, is that where the discount is above 20% of market value, thereafter the ratio would be based on the purchase price to the purchaser, that is, after the discount, as a percentage of the mortgage. From 20% onwards, a loan-to-value ratio of the discounted price to the purchaser would be applied. The council would retain an equity stake in the discount amount and the loan-to-value ratio would be based on the market value of the purchase price. Every time the discount goes up by 1%, the loan-to-value ratio would go up by 1%. By the time one gets to a 40% discount, there would be a loan-to-value ratio of 90%. If it is a 25% discount, it would be a loan-to-value ratio requiring 75%. If the discount goes to 30%, it would be a loan-to-value ratio of 80%. At a 35% discount, it would be 85% and at 40% it would be 90%. It is one for one. That would ensure that people qualify for the help-to-buy scheme and it would take away the dead weight. It would ensure that people who require the help-to-buy scheme get it. In the context of the original intention of the scheme, there was a loan-to-value ratio of 70%. Those who made it below that may have had a large amount of savings. Such people got the help-to-buy scheme but did not require it.

This issue affects a certain category of people. The current mortgage lending limit is 3.5 times a person's salary. On 1 January, that will increase to four times a person's salary. With that, we are looking at the social income housing limits going up by €5,000 from 1 January. This means that at the top band, those with an income above €40,000 will not qualify for social housing. By my calculations, working off a limit of 3.5 times a person's earnings, a person with a salary of €46,000 will qualify for the help-to-buy scheme with a discount rate of 40%. If that limit goes to four times a person's salary, those with a salary of €40,500 will qualify. The key thing is that cohort will not qualify for social housing. I want those people to get affordable housing. A good example would be to take a house with a price of €300,000. A discount of 40%, or €120,000, would mean the price to the purchaser would be €180,000. The purchaser would get €18,000 from the help-to-buy scheme, and have a mortgage of €162,000. Using 3.5 times annual salary, that would put the person on a salary of €46,000.

I want people to be able to purchase their own homes. I have done this as best I can. I know the Department has considered it. I am asking for a review. I want people to be able to purchase their own homes if at all possible. If the State needs to take an equity stake, so be it. The problem is that if the discount rate is above 20%, the person will not qualify for the help-to-buy scheme. I am looking for an increasing loan-to-value ratio based on the purchase price to the mortgage. It is getting rid of the dead weight. If I have a mortgage of 75%, that means I have 25%. The help-to-buy scheme will get me a maximum of approximately 10% of the value, or €22,500, and I provide the balance in savings. I do not need that high discount. If I am on a salary of €46,000, however, I require it. The State still retains an equity stake. Is it not better to have the State take an equity stake of 40% rather than having those people being required eventually to go on the social housing list and the State having to invest 100% of the cost of the house? I am a proponent of house purchase. I want people to be able to afford their own homes. I want the State to assist them. There is no risk to the State here. There is a cost in the help-to-buy scheme and I accept that, but it is a small price to pay. These people will not have to avail of HAP. They will be able to pay their own mortgage. I am asking for an overall review of the help-to-buy scheme and its interaction with the local authority affordable housing scheme. I feel very strongly about this. I want us to have a model. We are seeking to cater for all categories. People whose income is below €40,000 can avail of social housing. Those whose incomes are higher can go for private housing and mortgages. There is a cohort in between. I am worried there is a lacuna whereby a cohort earning between €40,000 and €45,000 or €50,000 cannot get on the property ladder. We should assist them, with the State taking a stake with the discount. I have already made an initial submission. All I am asking is that the Department carry out a detailed review on this issue.

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