House buyers urged to apply for local authority home loans

The loan can be used to purchase a second-hand home as well as new homes and for self-builds.

Housing Minister Darragh O’Brien: The scheme offers ‘tangible financial assistance’ to prospective homeowners. Picture: Gareth Chaney/Collins

Prospective homeowners who may have had difficulty getting mortgage approval have been urged to apply for a Government-backed mortgage scheme, with Housing Minister Darragh O’Brien on Monday launching an advertising campaign aimed at encouraging take-up.

The local authority home loan scheme enables first-time buyers to borrow up to 90% of the value of their home, and Mr O’Brien said the initiative offers “tangible financial assistance to those looking to purchase their own home”.

However, statistics for the first six months of the year show that of the 707 valid applications assessed, only 281 were recommended for approval.

Similarly, the figures for 2022 show that only around 40% of applications are successful under the scheme.

Originally launched as the rebuilding Ireland home loan scheme, the funding initially earmarked for the scheme was quickly highlighted to be inadequate in the face of high demand.

Unlike the help to buy and shared equity schemes, the local authority home loan can be used to purchase a second-hand home as well as new homes and for self-builds.

The income limit for single applicants stands at €70,000, and €85,000 for a couple. In Dublin, Kildare, and Wicklow, the maximum value of the property on the scheme is €360,000. This drops to €330,000 in Cork, Galway, Louth, and Meath, and drops further for other counties.

The scheme operates on the fresh start principle, meaning that applicants who are divorced or separated and have no interest in the family home can apply for the loan.

“To date, over 3,350 households have successfully applied to the scheme, have been provided with a State- backed mortgage, and have purchased their own home,” said Mr O’Brien.

“I’m encouraging anyone who is seeking to get on the property ladder but who have received insufficient offers of finance to look into the option of applying for a local authority home loan.”

Potential problems

Potential problems with the scheme have been highlighted in the Dáil, even by Government TDs.

“There is a cohort of people who earn over the limit for social housing but do not earn enough to qualify for the local authority home loan,” Fine Gael’s Emer Higgins told the Dáil in May.

“I am dealing with a case of one woman who is brought over the income limit purely by her benefit-in-kind.

“This means she cannot qualify for social housing and yet she does not earn enough to meet the repayment conditions of the local authority home loan.

“This is even though she is currently paying more in rent than she probably would pay in the mortgage repayments.

“This woman is one of the many people affected by this and who are falling between the cracks. Surely they are exactly the kind of people we want the local authority home loan to be able to support.”