The Local Authority Affordable Purchase Scheme helps people on low to moderate incomes buy homes at reduced prices. New homes under this scheme are located in areas with the greatest housing need and where affordability is an issue. The local authority takes a percentage stake in your home that covers the reduction in price. So, if you buy the home at a 20 per cent discount the local authority will have a 20 per cent stake in your home. If you want, you can buy back the local authority’s stake at any time, but you don’t have to. This scheme is aimed at first-time buyers, but there are some exceptions to this.
There is also a national affordable home scheme where the State and participating banks pay up to 30 per cent of the cost of your new home in return for a stake in your home.
Do I qualify for the Local Authority Affordable Purchase Scheme?
To qualify for this scheme you must meet certain income, property and residency criteria, see below.
Your income and savings
To qualify for the scheme:
• Your income must be below a certain level. This is calculated by multiplying your gross annual income by 3.5. This figure is known as your 'purchasing power' and it must then be less than 85.5 per cent of the market value of the affordable home.
Or
• You must have proof from a bank or financial institution that you cannot get a mortgage for 85.5 per cent of the market value of the home
The market value of the properties is agreed by the local authority running the scheme before the scheme is launched. More detail on what is considered assessable income is available in the Affordable Housing Income Assessment Policy.
If you have savings above a certain amount you may not qualify for this scheme. You can have the money to cover the deposit for the home and an additional €30,000. Anything above this is added to your purchasing power. And, if this goes above 95 per cent of the market value of the home you are not eligible for the scheme.
Property
You must not already have a home that you bought or built to live in. There are some exceptions to this for people whose relationships have ended, have lost the home because of bankruptcy, or whose home is no longer suitable. For example, you may qualify if you bought a home with your spouse, but the marriage has ended and you are now applying for the scheme on your own or with a new partner.
Also, you must not already own or have an interest in another property. This applies unless the property is unsuitable for your household’s needs.
Residency
You have the right to live in the State.
The qualifying criteria for this scheme is set-out in the Affordable Housing Act 2021 and the Affordable Housing Regulations 2022.
How much will my new home cost?
The price you pay for your new home and the equity share the local authority takes in it are calculated by the local authority. This calculation takes into account your maximum mortgage capacity and the minimum price set for the home by the local authority. These calculations are done in accordance with regulations.
How do I apply for the Local Authority Affordable Purchase Scheme?
Each local authority introduces its own affordable housing scheme and manages the application process. When homes are available under the scheme they will be advertised on the local authority's website and in a local newspaper. The advertisement will include details about the scheme including how and when to apply.
You will need to complete the application form and return it to the local authority, along with any additional documentation, by the closing date for the scheme. If you are interested in the Local Authority Affordable Purchase Scheme, you should check your local authority's website for details about upcoming schemes in your area.
What if I wish to sell my home?
If you sell your house within 20 years, you will have to pay the local authority a percentage of the proceeds of the sale - known as clawback. This percentage is the percentage difference between the sale price and the market value of the house. This amount will be reduced by 10 per cent each year after you have owned your home for 10 years. So, if you sell your home after 20 years, you will not have to pay any clawback to the local authority.
The market value at the time of selling your affordable home is used to calculate the amount of clawback due to the local authority. If the gap between the original sale price and market value has narrowed, the amount due to the local authority will also reduce. If the proceeds of the sale of your affordable home are below the initial price actually paid, you will not have to pay the local authority a percentage of the proceeds of the sale.
