Caoimhghín Ó Caoláin (Cavan-Monaghan, Sinn Fein)
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Question 34: To ask the Minister for the Environment, Heritage and Local Government if his attention has been drawn to the fact that there will be almost 4,000 affordable homes vacant by the end of 2009, that these affordable homes are often the same cost as or less than a similar unit in the private market and that people are finding it difficult to obtain a mortgage on a private home even when the affordable home is a higher cost than it; the steps he will take to reduce the costs of affordable housing; and if he will make a statement on the matter. [18072/09]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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Estimates obtained from a number of local authorities and the Affordable Homes Partnership during the first quarter of 2009 indicated that the number of affordable units on hands nationally was in the region of 3,700 units. Many of these are already in process of sale or are expected to be sold in the coming months. Factors affecting the housing market generally, including availability of mortgage credit, have, inevitably, impacted on the purchase of affordable housing. In light of analysis by my Department and the Affordable Homes Partnership, and engagement with local authorities, my Department issued a circular to authorities recently setting out guidance on the approach to be followed in addressing the stock of affordable homes. The circular also indicated that the local authority annuity loan limit has been increased to €220,000 to assist relevant purchasers in the current market, where private finance has become more difficult to access.

The majority of affordable units on hands or likely to be transferred to local authorities this year flow from Part V agreements between developers and the authorities. The price of these units primarily reflects the costs negotiated, in accordance with the relevant legislation, between authorities and developers. These costs are based on the sum of the site costs, calculated at existing use value, actual construction costs as agreed between the local authority and the developer, plus reasonable profit on those costs. In the case of units which are due to be transferred to local authorities, the scope to re-negotiate agreements in light of current market conditions, including price or method of compliance with Part V, depends on the nature of the contract entered into with the developer in the context of the Part V agreement.

Local authorities have been advised that, in the context of reduced open market prices, they may reduce the sale price of any affordable home through further subsidisation using Part V monies or other clawback proceeds on hands, where this is considered appropriate taking account of relevant factors in individual cases, particularly the continuing need to ensure value for money outcomes. Local authorities are best placed to judge, on the basis of local circumstances, whether this is appropriate. My Department will continue to monitor and support local authorities' work to address these challenging issues, and will adapt and develop the approaches involved, as necessary, in the evolving housing market and economic climate.