Housing Loans
Housing Finance Agency
The Housing Finance Agency is a state organisation that was designed to tap financial markets in order to advance funds to local authorities for the purpose of loans under the Housing Act. The agency advances loans to local authorities for their housing functions and also lends to individual housing bodies and voluntary organizations.
The HFA may transfer the benefit of the loans in its portfolio. The State guarantees the borrowings of the HFA.
Local Authority Mortgages
Formerly, local authorities provided mortgage finance for the purchase of residential properties. Since the 1970s, the proportion of local authority financing houses has reduced considerably as building societies, banks, and other financial institutions became the principal providers of housing finance.
State loans were restricted in the 1980s to those who were unable to secure a commercial mortgage loan. Former income-based mortgages were replaced by normal prepayment mortgages completely in the 1990s. The number of local authority mortgages has declined very significantly, so it now represents a small part only of the housing market.
Tenant Purchase Scheme
Commencing in the 1970s but accelerating through the 1980s and 1990s, the vast majority of local authority-constructed houses were sold to tenants on favourable terms. Such homes represent over one-quarter of owner-occupied houses.
Different tenant purchase schemes have been made over the years. Each involved a substantial discount on the market price linked to the number of years of tenancy. Owners also benefited from the first-time buyers grant and various other subsidies and discounts.
Housing Loan Regulations 2021
The principal scheme in respect of house purchase is provided by the Housing Loans Regulations 2021. They provide for the terms on which the housing authority may provide loans. The maximum value of a loan which can be advanced is determined by county.
The highest level is €360,000 in respect of the greater Dublin area to €275,000 in respect of Border and Western counties. The amount of the loan may not exceed 90% of the value of the property.
In order to be eligible for a housing loan, the gross income in the previous year of the applicant must be less than €70,000 in the case of one applicant and €85,000 in the case of two applicants or more. Persons must be between the ages of 18 and 70 and have a right to reside in the State. The dwelling must be intended as the normal place of residence.
The housing loans to be repaid within 30 years. Interest may be set by the Minister but cannot exceed the rate at which money is lent housing authorities by the housing finance agency for such purpose. There are various other requirements in relation to eligibility for the scheme.