On 11 May 2021, the Affordable Housing Bill 2021 was published (the "Bill"). Prior to the release of the Bill, it was evident that the Government was determined to provide measures to accommodate more affordable housing options. The clear aim of the Bill is to address problems associated with the high cost of housing for the portion of the population that do not qualify for social housing.
Affordable Dwelling Purchase Arrangements
Part 2 of the Bill provides for Affordable Dwelling Purchase Arrangements. Section 5 highlights three types of dwellings which these arrangements apply to:
(a) a dwelling made available by a housing authority under Section 6 of the Bill;
(b) a dwelling to which an agreement is made under Part V of the Planning and Development Acts applies and that dwelling is being made available for sale; or
(c) an open market dwelling.
The Bill states that a housing authority may enter into arrangements with an Approved Housing Body, the Land Development Agency and public private partnerships. Money provided by the Oireachtas may be used towards the cost of making these types of dwellings available. A housing authority must have regard to its housing services plan when performing these functions.
The public will be notified before a dwelling is made available for the purpose of sale to applicants. Before notifying the public, a housing authority must create a scheme of priority highlighting the order of priority to be accorded to eligible applicants. The Minister may provide regulations for matters which should be included in this priority list.
Under section 10 of the Bill, an eligibility assessment should be carried out by a housing authority when an application is made. Areas which will be reviewed includes an individual's financial situation, any interest in other properties and the right to reside in the State. The Minister may make regulations providing for the following:
(a) the price to be paid by the eligible applicant; and
(b) the amount of the affordable dwelling contribution.
Section 11 details some considerations to be taken into account by a housing authority in terms of priority given to applicants for the scheme.
It is clear that much of the detail required before implementation of the affordable purchase arrangements will require to be expanded by ministerial regulation.
Part 3 of the Bill introduces the concept of cost rental and provides a statutory footing for such schemes. Cost rental is the provision of rental accommodation with the rent directly linked to the cost of provision over a defined period. It looks to bring rents to affordable levels for tenants. Affordable rent is the concept that a discount will be applied to annual rents and not set at market rent.
Section 29 of the Bill explains the following key phrases:
- "Cost rental designation" means a designation of a dwelling as a cost rental dwelling under the seal of the Minister;
- "Cost rental dwelling" refers to a dwelling specified in a cost rental designation;
- "Cost rental period", in relation to a cost rental dwelling, means the period beginning on the date on which the cost rental designation specifying the dwelling is sealed by the Minister and ending on the date specified in the cost rental revocation; and
- "Cost rental tenancy" means a residential tenancy of a cost rental dwelling.
Under section 30, the owner of a property may apply to the Minister to designate their property as a cost rental dwelling. Section 31 highlights that if the Minister wishes to designate a dwelling as a cost rental dwelling, they must provide the owner with documentation which informs them about several items such as the minimum period and the maximum rent which may be sought from a tenant.
Section 32 demonstrates how the letting of cost rental properties shall take place. The landlord of a cost rental dwelling may only enter into a tenancy agreement with the tenant. They must ensure they lease the property in a transparent manner and adhere to the terms in accordance with the cost rental designation.
The Minister may provide instructions for the following:
- the process by which the public will be notified of vacancies, including application and allocation;
- eligibility requirements for tenants, including maximum and minimum income levels and the households of tenants, having regard to the type, size, and location of the dwelling, and the size and composition of the household;
- the tenant selection process;
- the placement of tenants into specific dwellings appropriate to their needs;
- in certain circumstances, the selection of tenants by lottery; and
- the form and content, including mandatory terms, of a cost rental tenancy agreement.
The Residential Tenancies Act 2004-2020 (the "RTA") will apply to cost rental dwellings subject to some exceptions. For instance, Section 16(k) of the RTA will not apply to cost rental tenancies, meaning a tenant of a cost rental dwelling cannot assign or sub-let.
Section 41 reveals that the State may grant the Housing Agency loans for Approved Housing Bodies to develop or make provisions for properties to be designated as cost rental dwellings. The State must give prior written consent before the Housing Agency can provide such loans. Pursuant to Section 41(13) regulations may be created which will explain the duration, percentage, conditions, and the manner in which the loans will be handled.
Provision of Funding to Purchase Equity Share in Dwellings
Part 4 of the Bill governs the provisions for the Purchase Equity Share scheme. Pursuant to Section 42 of the Bill, the State may contribute towards a special purpose vehicle established to provide funds to assist individuals in the purchase of shared equity properties. A memorandum of agreement made between the Minister and such special purpose vehicle may provide for certain conditions, including persons who are eligible to purchase a dwelling under the scheme and interest rates to be charged.
Under the scheme, the State may take up to 30% equity in a property. There are certain conditions that will be attached to this scheme that include, but are not limited to, the following:
- the property must be a new home; and
- the purchaser must be a first-time buyer.
After the State takes its equity share, the owner of the property will likely take out a mortgage with a bank on the remainder. The equity charge in favour of the State will then rank second to that mortgage.
The Bill also provides mechanics for parties to buy out the equity share provided certain conditions are met.
Arrangements Between Housing Authority and Land Development Agency
Part 5 of the Bill details the interaction between the Land Development Agency (the "LDA") and housing authorities in circumstances where the LDA is to make dwellings available. It provides the criteria for which the housing authority must notify the public before the LDA makes dwellings available for sale. The housing authorities will then determine the eligibility and priority of applicants for dwellings to be sold by the LDA, and the relative priority to be afforded to applicants in accordance with Sections 10 and 11 of the Bill respectively.
The Bill in its current format certainly sets a statutory framework for methods of delivery of housing beyond the types of proposals and schemes available historically. It is expected that some amendments will be made as the Bill passes through the Oireachtas and the Minister himself has signaled some further additions to ensure priority of housing for owner occupiers over other property owners. Much detail is left over to Ministerial Regulation but the effect of the Bill once enacted will be closely watched for any effect, intended or unintended, on the cost of housing and the availability of residential property to the market more generally.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.