Two out of every three houses the Galway City Council builds in the coming years must be allocated to people qualifying under the affordable houses scheme.
This is the view of Independent city councillor, Declan McDonnell, who said 60 to 70 per cent of houses built on council land must be designated as affordable houses, particularly on the east side of the city, where the highest number of social housing units are located.
Cllr McDonnell has cited as an example of the proposed development in Ballybane, on land to the rear of the John Paul II Centre - for which the council has received substantial funding - where the mix is 80 affordable houses and 18 social housing.
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Independent city councillor, Declan McDonnell.
The former mayor said it is imperative that the council continue to buy land for development as there is “a huge demand out for affordable houses” from people whose incomes are too high to qualify for social housing and too low to secure a mortgage from the banks.
Problems with affordable housing scheme
The Government’s Affordable Housing Bill 2020 was envisaged to provide such housing to the majority of the population, but it has been roundly criticised for being defective, and there are fears it will exacerbate the accommodation crises, not solve it.
Cllr McDonnell has said a major defect is that “the banks are not buying into it” because it includes a shared equity scheme.
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Under the scheme, the State would help a buyer who cannot get a mortgage for the full amount of the cost of the house, by paying up to 30 per cent of the cost. The State would retain that interest in the house for a certain number of years, reducing by about two per cent each year, so that if the buyer sells their house, they will have to pay back whatever equity amount is outstanding to the State.
'None of this will work if the banks are reluctant to give mortgages to people buying a home under the affordable houses scheme. It's now time for the banks to step up to the mark'
However, the banks are opposed to giving people mortgages with that claim by the State on the property. “The banks are worried that if something goes wrong with the repayment of the mortgage, the State would have a claim on part of the cost, and this could hit the banks’ profits if the house is sold,” said Cllr McDonnell.
'Step up to the mark'
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He said if this issue is not addressed, and the Government does not force the banks to “step up to the mark and play their part in this”, house buyers will be forced to seek a loan from the Rebuilding Ireland Home Loan fund through their local council, but, the former mayor pointed out, there will not be the level of funds required for that.
“None of this will work if the banks are reluctant to give mortgages to people buying a home under the affordable houses scheme,” he said. “It's now time for the banks to step up to the mark and help the people who saved them from collapse a decade or so ago.”
He is calling on all local TDs and Senators to question this aspect of the plan, in order that it can be “sorted out quickly”.
Cllr McDonnell also said the city council should consider, in building future housing developments, providing a mix of accommodation for people with disabilities and older people, alongside affordable houses.
