The State plans to significantly increase its intervention in the private housing market by releasing substantial tranches of State land to build affordable housing.
The move, the Affordable Purchase Scheme, is one of three new schemes announced by Minister for Housing Eoghan Murphy that also included a new State mortgage for first-time buyers with fixed low mortgage rates and a new affordable rent scheme.
The new purchase scheme will result in State land, controlled by local authorities, being made available for private houses, all of which will be affordable.
Outlining the scheme, Mr Murphy said the State would provide the land at reduced or no cost to facilitate affordable homes.
The purchaser will then be in a position to buy the house at a discounted price with the option of paying the equity (the cost of the land) interest fee at a later date.
Thus a house that might cost €250,000 on private land would be available at €200,000 under this scheme.
Some State land has already been earmarked for affordable housing. Mr Murphy said there were “four major ready-to-go sites in Dublin” where construction could begin in 2018. He said that 10,000 houses could be built in this manner by 2021.
A senior Government source said this amounted to a significant intervention by Government into the private housing market, especially when it begins to ramp up the release of sites, which might drive down the price of land.
“The fact that the land is available for free may force developers or equity funds who are holding on to lands to release them for development early, rather than face the possibility of the land losing value.”
Market impact
While much of the focus was on the affordable mortgage scheme, the sources said this land release could have a more significant impact on the housing market.
The new loan scheme will allow first-time buyers who cannot afford a home to avail of a new fixed low-interest loan of 2-2.25 per cent over 25-30 years for houses worth up to €320,000 in Dublin, and €250,000 elsewhere.
To qualify for the scheme, an individual must have an income below €50,000, or €75,000 for a couple. They must have previously had two refusals from financial institutions.
The third element, an affordable rent scheme, will allow long-term rents which reflect the build and maintenance costs, in addition to a small profit margin.
Irish Congress of Trade Unions general secretary Patricia King criticised the Government’s response to the housing and homelessness crisis as one that is “characterised by gestures, systemic policy failure and lacks the urgency and overall coherence that this very real emergency demands”.
Speaking ahead of an Ictu conference on housing and homelessness organised for Tuesday, Ms King said that measures such as those announced on Monday “making limited credit available to home buyers, through local authorities – are no more than gestures, given their likely impact and the scale of what we as a society are facing.
Systemic failure “What we are witnessing is systemic policy failure of the highest order. The key problem is a severe lack of supply of public housing and the fact that the State has abandoned housing policy to developers,” she said.
Fianna Fáil’s housing spokesman Barry Cowen welcomed aspects of the plan but said the mortgage might benefit 700 applicants, rather than the 1,000 claimed by Mr Murphy in the €200 million initiative.
He also questioned the estimates for house builds, which he said were far too low.
Sinn Féin’s Eoin Ó Broin said the plan was disappointing and argued the State should take the lead in supplying affordable housing, rather than leaving it to the private sector.
Labour’s Jan O’Sullivan said she was sceptical that what had been announced would benefit those who had been targeted because of affordability issues.
The Minister made the announcement at a housing summit with the chief executives of all 31 local authorities.
He announced former Threshold chief executive Bob Jordan as the national director of the Housing First programme after the summit.
