Most people who buy affordable housing are very pleased, writes Caroline Madden

Affordable housing. It may sound like an oxymoron given the current property climate but if you know where to look, this urban myth does, in fact, exist.

Take the two-bedroom apartments in the Garthy Wood development in Knocklyon coming on stream shortly . . . for less than €160,000, or the one-bedroom apartments near Clondalkin which will soon be available with a price tag of just over €128,000.

These are just two examples of the many properties regularly offered through the affordable homes initiative, all with a hefty discount (sometimes close to 50 per cent) knocked off their market value.

Yet, interestingly, the target audience for such properties - first-time buyers who find themselves priced out of the market - are largely oblivious to the benefits available under the scheme.

The Affordable Homes Partnership (AHP) was set up over a year ago to improve the delivery of affordable homes in the greater Dublin area. Chief executive John O'Connor says the awareness levels of affordable housing among the public lies at just 50 per cent.

"The best informed are the 50 to 60 age group, and not the target age group. It's the parents who are more clued in."

And of those who are aware of the scheme's existence, a common misconception persists in relation to the earnings limit for eligibility.

"Often people assume that you have to be on a very low income to apply for affordable housing. There's a lot of confusion about that," O'Connor says.

Generally, an individual can earn up to €55,000 a year and still remain eligible, although a number of local authorities operate a limit of €40,000. For couples making a joint application, the total income limit is set at €75,000. However very few couples actually avail of the scheme. "There aren't enough couples applying for affordable housing," O'Connor says.

Almost 80 per cent of applicants are single.

The main factor which diminishes the scheme's allure is the claw-back provision. In order to prevent opportunistic buyers quickly off-loading their property for the market price, and thereby pocketing a tidy profit, a harsh claw-back penalty applies.

If the property is sold within 20 years, a percentage of the sale price must be repaid to the local authority.

The terms of the claw-back are considered by many to be unnecessarily restrictive as they reduce people's ability to trade up if and when their circumstances change.

Nevertheless, the feedback from those who have bought an affordable homes is positive, O'Connor says.

"The majority of people who buy affordable housing are very pleased."

Any negative feedback tends to come from two main areas.

The application system is considered overly complex,and people also complain about not being kept informed of what is happening throughout the application process.

The Affordable Homes Partnership has been tackling these issues with the aim of achieving greater consistency between the various local authorities in greater Dublin.

"There is a common application form now for the four Dublin authorities," says O'Connor.

He advises people interested in living in Dublin to keep their options open by applying to all four Dublin county councils.

Up until autumn 2006, a separate application had to be submitted to the four local authorities of Dublin and four fees were required which amounted to approximately €230. Now there is a one-off fee of €50 which covers all four areas.

O'Connor explains that Dublin City Council is inundated with applications, so the waiting time there can be two or three years. The Dún Laoghaire- Rathdown area is also highly sought after. The selection process is a priority-based draw and depends partly on the length of time spent on the waiting panel.

Applicants hoping to live in south Dublin or Fingal have a much shorter wait.

"In Dublin you are likely to be made offers within 12 to 18 months in Fingal County Council and South Dublin County Council where you have a reasonable income and satisfy the eligibility criteria," O'Connor says.

Affordable homes are also available around the country. The areas of strongest demand - and consequently the longest waiting time - are the cities of Cork and Galway.

As well as streamlining the application process, advances have also been made by local authorities on making the whole process feel more like buying a home through an estate agent.

South Dublin County Council has been the main pioneer in this area, setting up a dedicated sales office in Tallaght (and a very informative website: www.propertypath.ie) providing information on upcoming properties.

O'Connor has some practical advice for those considering applying for an affordable home.

"The first and most important thing in terms of anyone buying a home is that they have to be able to afford a mortgage."

There has been some confusion about this, he says, and some people apply without really being in a position to afford a mortgage.

Even with the significant discounts available, the property prices can still be beyond the reach of those in the lower income brackets.

It was reported recently that hundreds of applicants who were offered affordable homes were subsequently declined as they were unable to arrange finance.

"At the end of the day you are purchasing an apartment or a house at a discount, but you do have to repay a mortgage. It's a serious commitment," O'Connor says. "Somebody who is thinking about affordable housing should start saving."

In general, a deposit of 3 per cent of the purchase price is required and a record of regular savings is also necessary, although proof of rent paid may suffice.

Once these criteria have been met, finance is usually arranged through the relevant local authority.

In this case, the maximum amount which can be borrowed is generally €185,000, and the mortgage repayments cannot exceed 35 per cent of the individual's net income.

Private financing is also available through three financial institutions - Bank of Ireland, the EBS and IIB.

Further information on financing is now available on the Affordable Homes Partnership's website www.affordablehome.ie

So overall, what's the verdict?

The affordable homes scheme isn't perfect, but if your options for 2007 consist of:

(a)living with your parents while scrimping for a deposit;

(b)buying a house two counties from where you work; or

(c)shelling out €6,000 or more on rent for yet another year, then you should give serious consideration to option

(d):applying to your local authority for an affordable home.

It could just be the best €50 you'll spend all year.