Affordable Dwellings Scheme

Overview

The purpose of the Affordable Housing Act is to provide the legislative and policy framework for a number of schemes aimed at making housing for purchase and rent more affordable for eligible households. These include

• the provision of affordable purchase housing by Local Authorities and the Land Development Agency,
• the introduction of a new Affordable Purchase Shared Equity scheme for the delivery of homes by private developers and
• the introduction of a new form of tenure in cost rental, which will initially see homes delivered by the Land Development Agency, Approved Housing Bodies and Local Authorities.

The capital funding for these schemes is voted by the Oireachtas in line with Government spending priorities. The assessment of delivery required under these schemes that form part of the review of the National Development Plan and the ‘Housing for All’ plan.

Affordable dwelling purchase arrangements

There are the three types of affordable dwellings to which Part 2 applies:

• affordable dwellings made available by a housing authority
• affordable housing provided under a Part V agreement, and
• open market dwellings (for which the housing authority is providing financial assistance to eligible applicants to purchase).

Provision of dwellings by housing authorities

Housing authorities have power to ‘acquire, build or cause to be built, or otherwise provide or facilitate the provision of, dwellings’ for affordable dwelling purchase arrangements. Housing authorities may enter into arrangements with an Approved Housing Body, the Land Development Agency or a public-private partnership to make such dwellings available.

The Minister may, with the consent of the Minister for Public Expenditure and Reform, pay grants out of moneys provided by the Oireachtas towards the cost of making such dwellings available.

Direct sales agreement

A housing authority may enter into an arrangement with a person who has provided dwellings for the housing authority, either (a developer, an Approved Housing Body, or a public private partnership) or to a Part V (planning condition) agreement.

This person may sell the dwellings directly to eligible applicants nominated by the housing authority. This obviates the need for the housing authority to take the dwellings provided into its own ownership first and then sell them itself to the eligible applicants.

Open market dwelling

Housing authorities may  provide financial assistance to eligible purchasers to acquire dwellings in the State on the open market that are of a class prescribed by regulations.

Prior to the making of dwellings available for sale under Part 2 (or making financial assistance available. Housing authorities must notify the public and invite applications. The form of the notification and the application may be prescribed by the Minister.

Where a person is  married,  in a civil partnership, or has a partner (a person with whom he/she is in an intimate and committed relationship) with whom he/she intends to reside in the dwelling, he/she may not apply to purchase an affordable dwelling on his/her own, but must apply to purchase together with his/her spouse or partner. ‘Applicant’ or ‘eligible applicant’ may therefore be one person or more than one person.

Assessment of eligibility

The following  conditions apply for purchaser eligibility:

• applicants’ financial means to be within parameters to be prescribed in regulations by the Minister with the consent of the Minister for Public Expenditure and Reform,
• applicants to be first-time buyers,
• applicants not to own or have an interest in another dwelling, and
• applicants to be legally entitled to reside in the State.

Limited exceptions are provided as follows:

•  person applying had previously purchased/built a dwelling as part of a marriage/relationship that has now ended, and that person does not retain a beneficial interest in the dwelling;
• a person applying had previously purchased a dwelling, but sold it/ became divested of it as part of insolvency/bankruptcy proceedings;
• a person applying owns or owned a dwelling, but it is now too small/ unsuitable for current household needs (it is envisaged that in such a case the affordable dwelling purchase arrangement would require that the first dwelling be sold. Regulations and/or Guidelines for housing authorities is issued on assessing whether a dwelling is too small/inadequate for the household’s needs).

It is intended to provide in Regulations, which require the consent of the Minister for Public Expenditure and Reform, that the eligibility threshold is that the applicant cannot secure a mortgage for 90% of the open market value of the dwelling being made available. Eligibility is linked to the affordability constraints of individual households and the price of the dwellings available. Regulations may also require that other savings/assets are taken into account when considering eligibility.

Scheme of priority

Housing authorities are required to make a ‘scheme of priority’ in accordance with Regulations to be made by the Minister. This will decide the order of priority as between eligible applicants where there are more applicants than dwellings available. It is provided that earlier schemes of priority (adopted by housing authorities in 2018) will cease to have effect on the coming into effect of this provision.

New schemes must be made prior to a housing authority first advertising the availability of dwellings for sale (or the availability of financial assistance to purchase open market dwellings). The making of a scheme of priority is a reserved function. Therefore, the consent of the elected members is required.

The Minister may make Regulations as to the content of schemes of priority, including but not limited to:

• priority for applicants for whom the dwelling in question is suited to their needs, having regard to their household size/composition;
• priority for applicants where none of the persons applying currently own or have an interest in a dwelling;
• priority for applicants on the basis of having lived some length of time in the housing authority area;
• priority for applicants on the basis of the date/time of

‘Household’ is defined as a person living alone or two or more persons who, in the opinion of the housing authority, have a reasonable need to live together.

The Regulations are intended to provide that 70% of the available affordable dwellings be allocated on the basis that

• the dwelling is suited to applicants’ needs,
• none of the persons applying own or have an existing interest in a dwelling,
• the applicant has lived for at least one year in the housing authority area, and
• the time/date of

The remaining 30% are to be allocated to eligible applicants for whom the dwelling is suited to their needs in accordance with a prioritisation to be drawn up by the housing authority itself, taking account of particular local priorities and circumstances.

Affordable dwelling purchase arrangements

A housing authority may enter an ‘affordable dwelling purchase arrangement’ with an eligible applicant. On the making of an ‘affordable dwelling contribution’ by the housing authority (a discount from market value in the case of the sale of a dwelling provided by housing authority, including through a Part V agreement, or a financial sum in the case of the purchase of an open market dwelling), the housing authority is entitled to an equity share in the dwelling.

This share, called the ‘affordable dwelling equity’, is the proportion that the affordable dwelling contribution bears to the market value of the affordable dwelling on the date on which an enforceable agreement is made for its purchase by the eligible applicant. The market value for the purposes of this section is as determined by the housing authority.

This equity is expressed as a percentage in accordance with the following formula:

((€A x 100)/€B) %

where—

• €A is the affordable dwelling contribution, and
• €B is the market value of the dwelling on the date on which an enforceable agreement is made for its purchase by the eligible applicant homeowner.

The affordable dwelling purchase arrangement is a written agreement, the form of which may be prescribed by the Minister, and it must contain certain terms. This would include

• the amount of affordable dwelling equity;
• provision for redemption payments by the homeowner;
•  provision for realisation by the housing authority of its equity share on the occurrence of various events and
• covenants requiring that the dwelling not be sold without the consent of the housing authority and that it be occupied as the primary residence of the applicant.

A ‘long stop date’ (to be c. 25/30 years) is prescribed before which the housing authority may not seek to realise the affordable dwelling equity other than for breach of specific terms of the agreement. The agreement may also contain such additional covenants/terms as may be included in the prescribed form, e.g., requiring the homeowner to keep the affordable dwelling in good and substantial repair and to keep the dwelling insured.

Registration of affordable dwelling purchase arrangemenarts

An affordable dwelling purchase arrangement is registrable in the Registry of Deeds as an act of the homeowner (this applies where the land is unregistered land) and as a burden on the folio (this applies where the land is registered land).

A a housing authority may enter into an arrangement with banks/mortgage providers so that the mortgage provided to enable the applicant to purchase the dwelling will have a higher priority than the housing authority’s affordable dwelling equity. Mortgage providers require such an agreement in order to provide mortgages to purchase these properties.

The housing authority may also enter such an agreement to enable the purchaser to obtain a top- up mortgage or switch mortgage providers, where this will not impair the capacity of the housing authority to realise the affordable dwelling equity.

Valuation of affordable dwelling for certain purposes

The market value of an affordable dwelling at any relevant time is the price the dwelling would be likely to achieve in a sale on the open market, or, when it is being sold, the amount it actually does achieve. Any increase in value attributable to ‘material improvements’ carried out by the homeowner or any reduction in the value attributable to lack of repair etc. by the homeowner is disregarded. ‘Material improvement’ for the purpose of this section means any addition or alteration to the dwelling, but does not include repairing, painting or decorating.

Other than for the original fixing of market value by the housing authority (i.e. prior to the affordable dwelling purchase arrangements being made) the ‘valuation mechanism’ provided for allows the homeowner to refer the housing authority estimate of market value (including the value of improvements made by the homeowner) to an independent valuer from a panel of suitably qualified people nominated by the housing authority. The cost of the independent valuation is shared equally between the housing authority and the homeowner.

Relationship with other enactments

Certain procedures which apply on the sale of local authority do not apply to the sale of a dwelling to an eligible applicant under an affordable dwelling purchase arrangement.

Regulations

In addition to the specific regulation making powers, the Minister may prescribe the form of any notices, deeds and other documents arising under affordable dwelling purchase arrangements, and such other matters as the Minister considers necessary and appropriate for the purpose of enabling this Part to have full effect.