Dáil Éireann Debate, Tuesday - 1 October 2024
253. Deputy Eoin Ó Broin asked the Minister for Housing, Local Government and Heritage the reason the pricing of homes under the affordable purchase scheme is based on an open market valuation, rather than the actual costs of delivery of the home; and to explain what happens to the portion of the affordable housing fund in cases where the cost of delivery is lower than the open market valuation. [38494/24]
Amharc ar fhreagraThe Local Authority Affordable Purchase Scheme (LAAPS) was introduced under the Affordable Housing Act 2021. It assists first-time buyers purchasing Local Authority-delivered new homes. This scheme uses an equity share model to give eligible purchasers the opportunity of home ownership at a significant discount.
Section 12(2) of the Act outlines that the purchase of an affordable dwelling shall be facilitated by the means of a contribution, which is the difference between the market value of the affordable dwelling and the price paid by the eligible applicant.
Section 14(1) of the Act provides that the market value in relation to an affordable dwelling, means the price for which the affordable dwelling might reasonably be expected to be sold on the open market. By so doing, this reflects the value of the asset to the purchaser at any given time.
The Affordable Housing (No.2) Regulations 2023 (S.I. No. 21 of 2023) prescribes how the minimum purchase price to be paid by an eligible applicant for a dwelling under an affordable dwelling arrangement should be calculated and sets the level of affordable dwelling contribution, stating that it should not be less than 5 percent and not greater than 40 percent of the market value of the dwelling concerned. Within these parameters, the actual upfront price paid by the purchaser is determined by the household’s purchasing power.
The cost at which new homes are delivered by local authorities for affordable purchase purposes is dependent on a range of variables, such as the location, the scale of the development, the size and type of the homes involved and the level of subsidy available from the Affordable Housing Fund to offset against the all-in cost.
The Affordable Housing Fund is available through my Department to assist local authorities to make homes available at an upfront discount by way of a grant subsidy towards the cost of developing affordable purchase homes. Generally, the minimum sales price of a home offered by a local authority for affordable purchase is determined by offsetting the level of subsidy available against the development cost of the homes.
Section 20 of the Affordable Housing Act 2021 outlines how certain moneys associated with an affordable dwelling arrangement including the equity and redemptions, received by housing authorities should be accounted for. Any capital receipts that accrue to a local authority from redemptions or prices paid by purchasers in excess of the minimum sales price, i.e. development cost less subsidy, must be ring-fenced and accounted for and deployed to support affordable housing delivery.
