Construction Industry Federation Consumer Advice

Affordable Housing 21 December 2005

The Affordable Housing Scheme is a scheme in Ireland that aims to help lower income households to buy their own homes. The Scheme provides for the sale of newly constructed homes and apartments in areas throughout Ireland where property prices have created an affordability gap for lower income house purchasers. These properties are then offered for sale to eligible first-time purchasers at prices significantly less than their actual market value.

The local authorities provide land on which new houses are built and sold. Your local authority will generally advertise the availability of houses for sale under this scheme in the local press or perhaps on local radio. If there are more eligible applicants than houses, the local authority will determine the order of priority, taking account of household circumstances, etc.

The houses will be bought with a mortgage provided by the local authority. The loan can be up to 97% of the price of the house, subject to repayments being no more than 35% of the household net income, i.e., income after tax and social insurance (PRSI).

Households may be entitled to a mortgage subsidy or the Mortgage Allowance Scheme, depending on their income in the previous tax year.

A minimum deposit of 3% must must be paid to the local authority.



Affordable Housing and New Housing Developments

County Councils and Local Authorities in Ireland must follow certain rules when providing affordable or social housing in new housing developments. These rules are set down in Part 5 of the Planning and Development Act, 2002. This Act sets down that up to 20% of any development can be set aside by the local authority for social or affordable housing. Each local authority has to include these provisions (i.e., the commitment to providing a percentage of social and affordable housing) into the development plans for their area.



Development plans are essentially blueprints for planning and development of your area. They include the local authorities objectives for the use of particular areas where you live (i.e., residential areas, industrial areas, agricultural areas, etc.). The plans are drawn up by the local authority in consulatation with interested groups (including citizens) and are available from your local authority to view if you wish.



While up to 20% of any new housing development can be set aside for social/affordable housing, the local authority will determine the exact percentage, given the level of social need in the area. It may decide for example, that zero percent of the overall development is appropriate. However, overall, the amount of social housing in any new developments cannot exceed 20% of the total housing development.



This provision of a percentage of affordable houses in the law now applies to any development of 5 or more homes, so now, any time that 5 or more homes are being developed, the local authority will decide how much (if any) will be affordable, social, voluntary, housing etc. They make this decision on the appropriate percentage at the planning approval stage.



Location of Affordable Houses in New Developments

There are no rules about where affordable houses should be located in new developmentes. It is for the local authority to decide which homes should be designated as affordable housing, as appropriate. For example the affordable houses may be peppered through the development/estate or may be grouped in pairs, in areas etc. The proximity of these homes will all depend on what the local authority approve as most appropriate for the area and most appropriate for the residents of these homes.

Rules
You qualify for the Affordable Housing Scheme if you are:

In need of housing and your income satisfies the income test below, or

Registered on a housing waiting list with a local authority, or

A local authority tenant or a tenant purchaser and you want to buy a private house and return your present house to the local authority, or

A tenant for more than one year of a home provided by a housing association under the Rental Subsidy Scheme and you want to buy a private house and return your present house to the housing association.

The income test only applies to the first category; if you are covered by the second, third or fourth category, you are exempt from the income test.

The Income Test
Single Income Household

If your gross income (before tax) in the last income tax year was 32,000 euro or less, you are eligible.



Two Income HouseHolds

Multiply the gross income (before tax) of the higher earner in the last income tax year by 2.5 and add the gross income of the other earner in the last income tax year. If the answer is 80,000 euro or less, you are eligible.



Mortgage Subsidy

If your gross household income is less than 25,500 euro, you will be entitled to a subsidy that will reduce your mortgage payments. This subsidy will be paid to the local authority. The subsidy is between 1,300 and 2,550 euro per year. A household that does not qualify under the third and fourth categories above (i.e., a household that does not qualify for this subsidy) may instead qualify for the Mortgage Allowance Scheme.



Selling Your House

If you sell your house within 20 years, you will have to pay the local authority a percentage of the proceeds of the sale. This is expressed as the percentage difference between the sale price and the market value of the house. This amount will be reduced by 10% each year after you have owned your home for 10 years. So, if you sell your home after 20 years, you will not have to pay anything to the local authority.



How to Apply

Contact your Local Authority for an application form and information pack about the Affordable Housing Scheme in your area. Generally, you will be required to supply the following information with your application:

A current payslip from your employer

An Income tax form (P60) or a PAYE balancing Sheet (P21)

Tax clearance certificate from the Tax Office

You may also be requested to submit a letter from your employer confirming permanency of employment. For self-employed people, you may be required to submit audited accounts for the previous 3 years.



If you are currently living in rented accommodation, a statement of your weekly rent signed by the landlord must be submitted or you can submit a copy of your rent book with your application.



Where to Apply

Applications for the affordable housing scheme are made to your local authority