Local authority house loans an overlooked possibility for buyers

IT’S TIME to put local authority loans back on buyers’ radar.

That’s according to estate agent Peter Skuse, who says the one-time popular source of finance for affordable homes is still on the books but just not promoted.

Local authorities can lend up to €185,000 from public funds for people to buy their homes instead of renting. If that threshold were moved up to say €250,000, it could make for a very successful and simply administered scheme, he says.

“Surely, at a time when the banks are nearly closed for business in lending mortgages, the local authorities could seize an opportunity. If it was a dog it would jump up and bite them,” he says. “With affordability coming in to the market (which was quite rare in the last five years) a purchaser getting their mortgage through a local authority can be moved out of rent allowance, and everyone wins.”

Stressing that the scheme as it has run for years is not to be confused with the Affordable Housing Scheme or Affordable Housing Initiative, Shared Ownership Scheme or the new HomeChoice loan (which has a limit of €285,000, but for new houses only) this otherwise straightforward public-funded house loans scheme has quite competitive rates, according to Mr Skuse.

The present loan limit is 95% of the property value to a maximum of €185,000 subject to income, with the maximum term being 30 years.

That segues him into offering two houses on opposite sides of Cork city (northside Larchfield, by Na Pairsaigh GAA club, and Bracken Court in Donnybrook on the southside), which he says could bought under the Local Authority Loan scheme if the threshold was raised to €250,000 or even €300,000 in cities.

The Larchfield three-bedroom terraced townhouse, No 55, was built about 10 years and is priced at €285,000. No 114 Bracken Court is a three bedroom semi built about 20 years ago and is priced at €280,000. “Both of these properties and schemes proved ideal homes for young couples over the years, and will do again,” says Mr Skuse.

He points out that both schemes would have had buyers qualifying for new home grants.

“All we need now is finance to be available for young couples to purchase if they so wish. Some may be waiting, who feel prices have not hit bottom yet, but if it was so easy to recognise the bottom line a lot of people would have sold when the market was at its height.”