The Housing Minister has denied that regional price caps under the Shared Equity Scheme will be "price targets for developers".
Darragh O'Brien brought the Affordable Housing Bill 2021 to Cabinet, with the controversial scheme one of four proposed measures designed to address house prices across the country. The scheme will see €75m of Exchequer funds allocated to allow the Government to offer equity loans of up to 20% on new-build homes.
The price of the homes eligible will be capped based on their regions, the Minister announced, but said that this would not lead to developers driving up prices.
The homes will be capped at €450,000 in Dublin City and Dun Laoghaire and €400,000 in Cork City, Fingal, Galway City, South Dublin and Wicklow.
In Cork County, Galway County, Kildare, Limerick City, Limerick County and Meath, the cap is €350,000, dropping to €300,000 for homes in Clare, Westmeath and Wexford.
In Carlow, Louth and Offaly, the price cap will be €275,000, while in Kerry, Kilkenny, Laois, Roscommon, Waterford City and Waterford County it will be €250,000.
The seventh band is €225,000 for Cavan, Donegal, Leitrim, Longford, Mayo, Monaghan, Sligo and Tipperary.
Those who take the equity loans can buy out the government's stake, pay back the loan on a monthly basis or pay back the percentage amount from the proceeds of the sale of the home.
As revealed by the Irish Examiner, there will be 0% charged on the first five years of the loan, rising to 1.75% in year six, and 2.15% in year 16. After year 30, this would go up to 2.85%.
However, the Opposition has claimed that the price caps do not reflect affordability and will instead become price targets for developers. Members of the Oireachtas Housing Committee from Sinn Féin, Labour and the Social Democrats said the scheme "is not affordable housing".
Social Democrats TD Cian O'Callaghan said the price caps "could push up house prices", while Labour's Rebecca Moynihan said the Bill does not have an adequate definition of affordability. She said the bill is "an investor-led approach to housing".
The Affordable Housing Bill is an investor led bill— Rebecca Moynihan (@RebeccaMoy) May 4, 2021
💶Affordability not linked to income + cost rental will be a for profit model
📈The shared equity scheme demand led that commentators such as the ESRI and Central Bank say will increase house priceshttps://t.co/gOxKBbxACQ
Sinn Féin's Eoin O Broin said the legislation is "pro-big developer" and that "you have to be living in a different world to think €450,000 is affordable".
He said the bill should not allow commercial entities to access state funding to deliver housing and accused the Minister of "actively undermining" the Housing Committee because the pre-legislative scrutiny report on the Bill had not been published.
Housing Committee hasn’t agreed our pre legislative scrutiny report yet. Nor has the Minister received a copy of the Committee report.— Eoin Ó Broin (@EOBroin) May 4, 2021
Despite this he has ploughed ahead & brought the Bill to cabinet. Clearly the Minister isn’t interested in the views of the Committee. https://t.co/gYnOO4WbmR
However, the Minister said extensive scrutiny of the bill had taken place and the shared equity scheme would "help first-time buyers bridge the affordability gap". He said the scheme is "very targeted" and will account for 1.5% of the overall mortgage market.
"I'm open to reasonable amendments, but I'm not open to people dragging their feet. The caps are there because what's affordable in one area isn't in another."
The bill will also provide for the first scheme of direct State-built affordable homes in over a decade and the first-ever national cost-rent scheme, as well as extending Part V rules to require every development in each Local Authority area to set aside a 10% minimum for social housing and a further 10% requirement for affordable homes where required.