Friday, 4 June 2021
Affordable Housing Bill 2021: Committee Stage (Resumed)
On Senator Gavan's point, which Senator Moynihan also raised, we have confirmed that homes will be made available by local authorities in a price range of €160,00 to €300,000. Using the Rebuilding Ireland home loan, this means homes are available to a much wider cohort of income groups.
I will address amendment No. 37 first. Section 10 provides for regulations to be made to deal with matters of income eligibility on a general basis. I do not consider it appropriate that housing authorities adopt their own thresholds in relation to these matters. Inevitably, this would lead to arbitrary assessment of the same household’s eligibility from one local authority area to another and unfair, inconsistent outcomes both within and between households. Accordingly, I do not propose to accept this amendment.
The scheme is targeted at persons who cannot afford to purchase a dwelling suited to their household needs on the open market. The income of the applicants will be taken into account when determining eligibility. However, in respect of particular cohorts referenced by Senator Higgins, such as key workers in a particular area, I confirm it is the intention to allow that local authorities members, as a reserved function and having regard to their own particular housing needs and characteristics, could provide for a specific scheme of priority for 30% of the dwellings being made available for that cohort.
Amendment No. 38 broadly proposes changes relating to alternate assessment of an applicant household's eligibility under income grounds. We have discussed this previously under similar amendments. As has been outlined, the regulations proposed to be made under this section regarding the threshold for purchaser eligibility will be that the applicant is unable to purchase the dwelling suitable for his or her needs on the open market because that household is unable to secure a bank or financial institution mortgage for 90% of the market value.
The equity support to be taken by a housing authority will bridge the gap between what the applicant can borrow under the macroprudential rules, which is 3.5 times income, and the market value of the dwelling. This is subject to the fact that there will be a minimum price below which the housing authority cannot sell the dwelling for, having regard to the cost of delivery. From a financial sustainability perspective, no household will be required to borrow more than that household can obtain under the Central Bank’s macroprudential rules, even taking into account a Rebuilding Ireland home loan and the possibility it could, in fact, borrow more than that.
The effect of the macroprudential rules is that mortgage repayments are generally considerably less than 35% of net income. For example, based on a mortgage of 3.5 times gross income repayable over 30 years at an interest rate of 3%, the repayments as a percentage of net income for a single person would be 23.3% at a gross income of €45,000 and 24.8% at a gross income of €55,000.For a couple with two incomes, the repayments on such a mortgage as a percentage of net income would be 20.3% at a gross income of €50,000, 20.9% at a gross income of €60,000 and 21.4% at a gross income of €70,000. Accordingly, the amendment proposed with regard to purchasers not spending more than 35% of income on housing costs is not necessary.
As regards the second part of amendment No. 38, as I have stated, the scheme is targeted at people who cannot afford to buy the dwellings in question at market value, which I consider to be a more appropriate threshold than an income limit. Accordingly, I do not propose to accept the amendment.