Break on through to the affordable side

Affordability - the be all and end all of the property market - will naturally be a much more significant issue for those on lower incomes that it will be for racing drivers and pop stars.

For a large number of would-be buyers at the bottom end of the income scale, it is the fence at which their notions of a little place of their own will fall down. Such individuals, some of whom will be classified as "urban professionals" may be paid wages that will simply never pass muster with a bank manager seeking to manage his loan book. They may earn €35,000 a year or something similar (a wage that represents a dream for a large number of workers and a pittance for others) but this will not be good enough to get them over the line for what most would class as a starter home in a city area.

So what will the solution be? Happily (for once), there is a scheme which is designed specifically to allow lower-income people to buy a house without forcing them to move hundreds of miles away - affordable housing. It is simply a matter of knowing that it exists and figuring out how to take part.

Affordable housing has its critics, principally among certain types who believe it is not sufficiently widespread and those who do not quite like the idea of lower-income people moving into "their" area. For many however, it will be a godsend.

The basic idea behind the scheme is that it allows people on lower incomes to buy a house or apartment where they may not previously have been able to afford a purchase. The houses, which will be new, will be ringfenced so they can only be sold at below-market prices to people who qualify for the scheme. Qualification is based on simple rules.

For local-authority projects, a single person must have earned less than €36,800 before tax in the previous year. A two-income household must multiply the gross income of the higher earner by 2.5 and then add the gross salary of the second. If the result is less than €92,000 or less, then the couple can apply. On private developments, people will qualify if 35 per cent of their income is not enough to allow them to afford a house.

Affordable housing projects will tend to be advertised in the area of their location (either on local authority land or within private housing developments), with local authorities charged with deciding on who gets to finally purchase the properties.

In many cases where demand outstrips supply, this decision-making process can be akin to a simple draw which takes account of household circumstances. The bottom line however will be that single people will not automatically be ruled out because they do not have a sufficiently large "household".

When it comes to actually paying for affordable properties, mortgages of up to 97 per cent of the value of the house will be available from the local authority, subject to an applicant's after-tax income. These loans are however capped at €165,000, a level which may not be sufficiently high for some schemes or some applicants.

The alternative is to borrow the 97 per cent from a private lender, with Bank of Ireland blazing the trail in this area with its "Breakthrough" loan late last year. This product, designed for affordable housing, puts no ceiling on the amount that can be borrowed, provided the bank is happy that it can be repaid.