Plan aims to help low earners buy homes

SOCIAL WELFARE recipients and low earners seeking to buy new houses could be given up to 60 per cent of the value of the property by the exchequer, under the new Housing Bill published yesterday by Minister for the Environment John Gormley.

The Bill introduces a range of measures designed to encourage more people to buy houses and to improve the management of social housing by local authorities. However, the long-awaited legislation to allow tenants to purchase their local authority flats has not been included in the Bill.

The new incremental purchase scheme will allow people who qualify for social housing and cannot afford to buy under the affordable housing scheme to get on the property ladder.

Qualifying applicants will take out a mortgage for a percentage of the purchase price (likely to be about 40 per cent, although the terms have yet to be finalised) to buy a house from a local authority or voluntary housing body. The remaining stake in the house is gradually released to the buyer over the period of their mortgage.

Unlike the existing shared ownership scheme, which was also aimed at buyers who could not afford affordable housing, buyers pay no rent or any other charge to the council and are entitled to full ownership of the house on purchase of their share of the equity.

The scheme will only apply to newly built houses offered through local authorities or voluntary and co-operative bodies.

It will also provide more money for social housing to be built, as people who would ordinarily be renting for extended periods will be providing funds to local authorities through their mortgages.

However, because it applies to new houses only, the scheme will not be available to the thousands of local authority flat tenants, who, according to Dublin City Council, want to buy their homes.

A tenant-purchase scheme for flats was introduced by Dublin Corporation, now Dublin City Council, in 1988, but collapsed because of a lack of legislation to deal with issues such as ownership and maintenance of common areas, such as stairwells and gardens, and the protection of residents who chose not to buy and remain tenants.

The council made several detailed proposals to the department for a sale-of-flats scheme, and in January of last year the department said the legislation was being drafted. Last October the then housing minister, Batt O'Keeffe, said the legislation had been delayed because of legal issues raised by the Attorney General.

Until recent weeks, city councillors had expected the scheme would be included in the Housing Bill. Mr Gormley said he regretted the sale of flats was not in the Bill, but said legal issues such as building management and transfer of title could not be resolved in time for publication.

The Bill offers some relief for owners of affordable housing who need to change mortgage terms. Previously, any mortgage change, such as refinancing, triggered a "clawback" requiring the owner to repay the discount received on their purchase. This anomaly has been removed; however, families who have outgrown their affordable home still cannot upsize without triggering the clawback.

The Bill would give local authorities more powers to deal with issues such as anti-social behaviour, which was making people's lives "unbearable", Mr Gormley said.

"I've been accused in the last few weeks of taking powers away from local authorities. What we're doing here is empowering councillors to draw up their own charter and decide how they proceed."

Local authorities will be required to devise housing plans that comply with ministerial regulations and guidelines and national policies, rather than using individual systems developed on an ad-hoc basis, Mr Gormley said.