Written answers

Tuesday, 28 July 2020

Department of Housing, Planning, and Local Government

Home Loan Scheme

Photo of Gerald NashGerald Nash (Louth, Labour)
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337. To ask the Minister for Housing, Planning, and Local Government if he will provide the circular issued to local authorities in the past two weeks on the operation of the Rebuilding Ireland home loan scheme as it relates to applicants on the temporary wage subsidy scheme; and if he will make a statement on the matter. [18395/20]

Photo of Darragh O'BrienDarragh O'Brien (Dublin Fingal, Fianna Fail)
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The Covid-19 situation has had an unprecedented economic impact and unfortunately some applicants for the RIHL have been affected. In order to address this issue, my Department has issued guidance to local authorities on the process for dealing with applicants already in the application/approval process whose economic circumstances have changed for the worse. These options could include reducing, suspending or withdrawing the amount that can be borrowed. However, there is no one size fits all approach, it depends on the individual circumstances.

On 6 July my Department issued a Circular including additional guidance on the treatment of persons whose employers avail of the Temporary Wage Subsidy Scheme (TWSS) as a result of the Covid-19 pandemic.  Circulars in relation to lending issues, in particular, those that relate to certain provisions of the Credit Policy for the RIHL, are not considered appropriate to release.

Nonetheless, I can confirm that in general, persons currently on the TWSS can continue to apply for a RIHL mortgage based on their pre-TWSS Income. This will provide clarity to applicants regarding their eligibility for the loan and will enable them to commence the property search. Where such applicants are approved for a RIHL loan, draw down would not commence until the applicants' unsupported income post TWSS has returned to the level specified in the original application for a period of time, usually up to three months. Local authorities can, however, use their judgement and knowledge of local employers to advance loans to applicants before the end of this three-month period, where appropriate. There is no blanket ban.

In the case of a joint application where only one party is on TWSS, the application can also proceed to drawdown if repayment capacity can be assured based on the other person’s income.  For applicants whose post-TWSS income is lower (e.g. due to reduced hours) than stated on their application, their application can be re-assessed to determine the most appropriate borrowing amount for them.

This approach is in line with the need to lend on a prudent basis, as a mortgage is a long-term commitment and it would not be appropriate to lend when there is a risk that the person’s income and ability to pay might not return to the level required to support the borrowing requested.  This is both for the protection of the lender and the borrower, in particular to seek to ensure that borrowers are not left with unsustainable debt burdens.  

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