Paul Daly (Fianna Fail)
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We move to the matter raised by Senator John Cummins. On my own behalf, as a former colleague in this House of the Minister of State, Deputy Kieran O’Donnell, it gives me great pleasure to welcome him back on his first visit to the House in the Minister's chair. I congratulate him on his appointment and wish him all the very best going forward. I call Senator Cummins.

John Cummins (Fine Gael)
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I echo those comments in welcoming my colleague, the Minister of State, Deputy O'Donnell, who is a former Member of this House. I look forward to working with him in my role as spokesman and also as a member of the joint Oireachtas committee. We will have a lot of legislation in the House in the months ahead, not least in the area of planning, and I know the Minister of State will be a regular visitor here as a result. I congratulate him and have no doubt he will do exceptional work in his new role.

I want to bring a particular problem to the Minister of State's attention regarding what I feel are arbitrary ceilings on the maximum market value of properties that can be purchased with the assistance of the local authority home loan. There are also two further issues I want to raise, the first relating to the income limits that apply to applicants and the second relating to the interaction of the local authority home loan with the local authority affordable purchase scheme. For today's purposes, I am going to use my own county of Waterford, not to be parochial but because, thankfully, all of the schemes under Housing for All are available in Waterford at the moment.

The maximum market value of a property that can be purchased or self-built using the local authority home loan is €320,000 for the counties of Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow and €250,000 for the rest of the country. It is my contention that the threshold of €250,000 for the counties outside of Dublin, Cork and the commuter belt is too low, in particular for the counties of Waterford and the Minister of State's county of Limerick. I believe it needs to be increased to €300,000. More important, and of even more urgency, is how the local authority home loan interacts with the local authority affordable purchase price. In Waterford at the moment, Waterford City and County Council has, thankfully, 117 affordable purchase properties available for purchase at Summerfields and Deerpark in Waterford city.Sales are progressing well, although many of those properties are still available. I encourage anybody who wants assistance with them to contact the local authority.

The issue that has been brought to my attention by the local authority is the fact that the home loan is based on the market value of the property as opposed to the affordable purchase price, which means that purchasers are not in a position to use that local authority home loan and are restricted to participating lending institutions. While this is okay in the vast majority of cases, a number of people will need to avail of a loan who have been refused adequate loans from the pillar banks. Regarding a house priced at €300,000 under the affordable housing scheme, that is the market value. When the equity discount of €75,000 is applied to that, it brings the price down to €225,000. This means that a couple on a very average combined income of €51,000 are able to purchase a €300,000 A-rated home. While this is a fantastic opportunity in an excellent scheme, some people will need to avail of the local authority home loan. I am looking for it to be based on the affordable purchase price as opposed to the market value of the home. Perhaps the Minister of State could address that. The income threshold outside the commuter belt is €50,000 for an individual and €75,000 for a couple. These thresholds need to be looked at.

Kieran O'Donnell (Limerick City, Fine Gael)
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I thank the Acting Chairman for his kind comments. As a former Member of this House, I very much look forward to working with the House in my capacity as Minister of State in the Department of Housing, Local Government and Heritage.

I thank the Senator for raising this important issue and some additional issues and allowing me the opportunity to provide an update on this matter. I am well aware of the work the Senator does in Waterford and, more particularly, as my party's spokesperson on housing in the Seanad.

The local authority home loan is a Government-backed mortgage for first-time buyers or other eligible applicants through local authorities. The scheme is available for the purchase of new or second-hand residential properties and for self-builds. The loan is aimed at buyers who are unable to secure the mortgage they need from a financial lending institution. The local authority home loan has been available nationwide from all local authorities since 4 January 2022.

The income ceiling for a single applicant is €65,000, which is up from €50,000 under the previous scheme, the Rebuilding Ireland home Loan, for residential properties in counties Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow where the maximum market values of the properties is €320,000. There is a €50,000 income ceiling for single applicants seeking to purchase homes in all other counties where the maximum market value of the property is €250,000. The ceiling for joint applicants is €75,000 nationwide.

It is important to note that the house price limits for homes sold under local authority affordable housing schemes are calculated differently from the house price limits for homes bought on the open market. One is a market value, while the other is a discounted purchase price value. If a home is being sold under a local authority affordable purchase scheme, the relevant price for the determination of the home's eligibility for the local authority home loan and for the maximum borrowing amount is the purchase price determined by the relevant local authority for that affordable purchase home. Regardless of the market value, if the purchase price is below the relevant maximum price under the local authority home loan for that local authority, it is eligible to be purchased using the local authority home loan. The basis for that is Statutory Instrument No. 701 of 2021, Housing Loan Regulations 2021. That was circulated to every local authority and specified that it is the purchase price that should be taken into account for complying with the house price limit if the home is purchased under the local authority affordable purchase scheme. That is the discounted price.

To ensure there is absolute clarity, particularly for the Senator in the context of Waterford, my Department is preparing a guidance note on the interaction of the local authority home loan with the local authority affordable purchase scheme. This will provide a detailed example of how the two schemes should interact. As it stands, SI 701 of 2021, Housing Loan Regulations 2021, provides that it is the discounted purchase price and not the market price that can be used to comply. If the discounted price is below €250,000, a person can avail of the home loan scheme as well. In the example cited by the Senator, the purchase price is €230,000, which is within the local authority home loan scheme limits for Waterford.

All local authorities with local authority affordable purchase schemes will have homes within current house price limits and, as such, both schemes work well together. While it may be the case that not every local authority affordable purchase home will be eligible, such as larger and, in particular, higher priced houses, this is understandable as the local authority home loan is aimed at a lower income cohort.

We will continue to monitor these scheme parameters as the housing market has changed since the house price limits were first set. It goes back to the Senator's point about the price and the income threshold. I will take the matter up with my Department in terms of the review. It is important that the local authority home loan remains relevant for aspiring homeowners. It is reasonable, as the Senator suggests, that local authority affordable purchase houses should generally be eligible for purchase using the local authority home loan. We are keeping the appropriate house price limits under review and will ensure that any changes to house price limits maintain coherence between these schemes.

John Cummins (Fine Gael)
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I thank the Minister of State for confirming that it is based on the affordable purchase price as opposed to the market value of the house. I welcome his statement that the Department will issue a guidance note to all local authorities because to be honest, many of them, including my local authority, are not aware of the scheme's interaction with the local authority home loan. There is still an issue because if somebody is only entitled to a €40,000 discount on a property, bringing the affordable purchase price to €260,000 in this case, he or she cannot access it. My initial point about looking to increase the maximum market value from €250,000 to €300,000 still stands and I would like to see the single income threshold of €65,000, which applies to the commuter belt, apply nationally and the €75,000 threshold for a couple increase to €85,000, to reflect current market conditions.

Kieran O'Donnell (Limerick City, Fine Gael)
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I thank the Senator for this discussion. The guidance note will issue. I will take the matter up with the Department. The statutory instrument is self-explanatory and I will ask that it be circulated to local authorities with immediate effect, with a follow-up in terms of the guidance note.

As noted previously, the application of the house price limits under the local authority home loan is different for the homes purchased under local authority affordable purchase schemes. The limits specifically refer to purchase prices, not market prices, and this ensures that the vast majority of affordable homes, including those in the example cited by the Senator, are eligible for purchase under the local authority home loan. Therefore, I consider that the schemes are designed to work in tandem. That principle is hugely important and the Senator has made that point.

We are keeping the local authority home loan under review to ensure it continues to be relevant in the current housing market so it can be a realistic support to home ownership. Any proposals to increase the house price would need to maintain coherence between the schemes to support the local authority affordable purchase scheme. Any changes to the home loan would require the consent of the Minister for Public Expenditure and Reform. We will advise colleagues in Government further when any changes are forthcoming.