Friday, 4 June 2021
Affordable Housing Bill 2021: Committee Stage (Resumed)
Malcolm Noonan (Carlow-Kilkenny, Green Party)
On conditionality and Part 5, amendments will be brought forward on Committee Stage in the Dáil.
Amendment No. 44 seeks to insert a new provision to provide that where a dwelling is being made available for affordable purchase under a Part 5 agreement, there will be no obligation on a housing authority to provide any financial contribution above an agreed affordable threshold. Under the Bill’s provisions, the affordable dwelling contribution is essentially the discount from market value. The percentage that discount represents of market value will be the percentage equity share the housing authority takes in the dwelling. The amount of the support provided will be the amount needed to bridge the gap between the amount the applicant can borrow under the Central Bank’s macroprudential rules and the market value of the home, subject to the proviso that there will be a minimum price below which the housing authority cannot sell the home. This amendment is not necessary or appropriate.
Amendment No. 45 proposes the replacement of section 12(2) in order to remove the reference to financial assistance by a housing authority towards the purchase of open market dwellings. Amendment No. 46 also proposes to amend section 12(2) to remove the reference to open market dwellings. As has been confirmed in response to similar amendments previously, I wish to retain these provisions.
Amendment No. 47 seeks to amend section 12 to limit the amount of the affordable dwelling contribution to 20% of market value. I do not consider it is appropriate to limit the affordable dwelling contribution, and hence the housing authority equity share, to 20% of market value. In some schemes, the housing authority will be in a position to sell the home at a price that represents a reduction of more than 20%. To limit the affordable dwelling contribution to 20% would exclude lower earners who can only afford to purchase the dwelling at the lowest price the housing authority can sell it for. This might be at a reduction of 25% or 30% from market value. These individuals may well be paying more in rent than the mortgage repayments. However, based on an analysis of serviced site fund applications to date, local authorities have estimated that the ultimate affordable dwelling contribution would be in the region of 10% to 20% in the majority of cases.
Amendment No. 48 seeks to insert a provision into section 12:
For the avoidance of doubt, no affordable dwelling contributions shall be required from a local authority in respect of an affordable dwelling made available for sale under a Part V agreement as specified in Section 5(b) or Section 7(2).
Amendment No. 49 seeks to amend section 12 on affordable dwelling equity. I am unclear as to the intention of this proposed amendment. The affordable dwelling contribution is essentially the discount from market value. The percentage that discount represents of market value will be the percentage equity share the housing authority takes in the dwelling. The amount of the contribution will be the amount needed to bridge the gap between the amount the applicant can borrow under the macroprudential rules and the market value of the unit, subject to the proviso that there will be a minimum price below which the housing authority cannot sell the unit. It is intended that some units provided via Part 5 agreements will be affordable dwellings and will be the subject of affordable dwelling purchase arrangements.
While it is not entirely clear, this amendment may be seeking to represent the housing authority’s equity share as a monetary amount as opposed to a percentage. For example, where a housing authority can sell a unit for €240,000, the market value of which is €300,000, the housing authority's equity share in a case where, based on the applicant’s income, the dwelling is being sold for the lowest possible price under this Bill is 20% - that is, the proportion €60,000 bears to €300,000.This means that when the purchaser wishes to redeem or buy out the housing authority equity, he or she will be required to pay the housing authority 20% of the market value of the dwelling at the time of redemption.
If the market value has increased to €350,000, the household will be required to pay €70,000 and if the market value has dropped to €250,000 the household will be required to pay €50,000. Under the proposed amendment, it appears that the purchaser would always be required to pay €60,000 to redeem the equity, regardless of whether the value of the dwelling has risen or fallen since the time of purchase. It is considered fair and appropriate that the benefit and risk is shared proportionately between the purchaser and the housing authority or taxpayer.
I highlight that under the provisions in the legislation, any equity which households choose to redeem will be retained by local authorities in a ring-fenced account and must be used for the purposes of further provision of affordable homes. Accordingly, I do not propose to accept this amendment, or amendment No. 50, which is consequential to amendment No. 49.