Two-income couples may lose under Planning Bill changes

A new definition of eligibility for affordable housing, outlined by the Minister for the Environment yesterday, would appear to discriminate against couples where both partners are earning a salary. The discrimination runs contrary to the Government's position as set out in the recently announced National Development Plan, where the emphasis is on return-to-work schemes and the need to increase the numbers at work.

Outlining his amendments to Part V of the Planning Bill, Mr Dempsey said he particularly wanted to clear up "once and for all" confusion over aspects of the Bill.

However, in changing the rules for eligibility for affordable housing, in a move designed to take account of fluctuations in prevailing interest rates, the Minister acknowledges that a couple where both partners are working could be entitled to a smaller mortgage than those with a single income.

An example supplied by the Minister's Department yesterday reads in part: "The definition of eligible persons is being amended to persons whose mortgage repayments would exceed 35 per cent of income net of income tax and PRSI.

"In the case of a two-income household, one-half of the second net income would be taken into account for the purpose of determining eligibility. For example, on this basis, a single person with a gross income of £25,000 would be able to afford a mortgage of £87,000 and a married couple with one income of £30,000 would be able to afford a mortgage of £120,000 (at 4.5 per cent interest rate)."

Significantly, the example continues: "In the case of a couple with two incomes of £20,000 and £10,000, the maximum affordable loan would be £106,000."

The problem is created by the multiplying factor being based on the principal income. In the example shown by the Department, the principal income in the case of the second couple was just £20,000, despite the fact that the total household income was the same as the single-income household. The household where the principal income is £30,000 is deemed able to afford a higher mortgage because of this emphasis on the principal income.

While it would not be the case that every single-income assessment would be higher than the principal income of a joint application, joint applications where the incomes are high are unlikely to qualify for local authority assistance in the first place.

The difficulties are likely to embarrass Mr Dempsey, not least because they have been highlighted by his own Department, but also because they are proposed as an amendment to the Planning Bill, one of a series designed to make the Bill more equitable.

A spokesman for the Department said last night changes were being made to "mirror the financial market".