Link affordable housing to inflation: TD

THE affordable housing scheme, which helps lower income households to buy their own homes, should be linked to the inflation rate or to the price of an average house, according to Cork TD John Dennehy.

Calling for a major review of the scheme, he said there were critical factors affecting the scheme which needed to be urgently addressed.

Currently, a single person qualifies if their pre-tax income in the last tax year was 32,000 or less, and in the case of a two-income household, 80,000 or less.

The houses are bought with a mortgage provided by the local authority. The loan can be up to 97%, subject to repayments being no more than 35% of the household net income Mr Dennehy said under affordable housing, a house would work out approximately 30,000 cheaper because the State provided the land. To cater for those who needed houses in the scheme, he said more land would have to be released, but unfortunately it was not as simple as that.

“The price of land is the crucial factor, but it is not the only one which the Government is considering at the moment,” he said.

At the moment, if 50 houses became available under affordable housing there would be about 300 applicants, which was indicative of the pressing need for good, reasonable houses.

“Ordinary people are being ruled out because their income is just a small bit over the limit, and they cannot afford to buy on the open market,” said Mr Dennehy.

His worry is if the interest rate goes up by 2% over the next couple of years, it would make it impossible for people to afford a house.

In 1992, about 22,000 housing units were built and last year that had soared to 68,000. The ESB has estimated they would this year connect 72,000 new units, either houses or apartments.

“Obviously, there is a huge demand for housing out there which is not being met. At the same time, the cost of houses has, incredibly, increased by up to 20% a year, although the rate of inflation is only 2.5%, and may probably reach 3 %,” said the Cork South Central deputy.

“There is no justification for that situation and it is vital that it be addressed because too many people are in a position of simply not being able to buy their own home.”