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 Header Item Estimates for Public Services 2019: Message from Select Committee
 Header Item Saincheisteanna Tráthúla - Topical Issue Debate
 Header Item Home Loan Scheme

Wednesday, 27 March 2019

Dáil Éireann Debate
Vol. 981 No. 1

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Estimates for Public Services 2019: Message from Select Committee

An Ceann Comhairle: Information on Seán Ó Fearghaíl Zoom on Seán Ó Fearghaíl The Select Committee on Employment Affairs and Social Protection has completed its consideration of the following Revised Estimate for Public Services for the year ending 31 December, 2019 - Vote No. 37.

Saincheisteanna Tráthúla - Topical Issue Debate

Home Loan Scheme

Deputy Mary Butler: Information on Mary Butler Zoom on Mary Butler The Rebuilding Ireland home loan was launched in February 2018 to replace the existing local authority mortgage schemes. Waterford City and County Council received an allocation of €2 million under the scheme which allows first-time buyers to borrow up to 90% of a property's value from the local authority. Figures show that Waterford City and County Council has provided mortgages to half of all of the applicants that have applied, which tallies with average approval rates nationally. So far, so good and the Minister of State may well ask me what is the problem. Waterford City and County Council has paid out €2.6 million to date, approving 15 mortgages. It currently has another €1.5 million worth of successful applicants, equating to 11 mortgages but it does not have the finances to fund these mortgages under the Rebuilding Ireland scheme as it has already exceeded its allocation. I spoke to the director of services yesterday who told me that the council is currently reviewing these applications and that some of the applicants are in dire straits.

I wish to refer to one specific case to illustrate the reality of the situation. A family living in Waterford who had been renting for the past nine years successfully applied for a Rebuilding Ireland home loan from Waterford council. The family then engaged a solicitor, agreed the purchase of a house, including furniture and contents, gave notice on the house they were renting and sold some of their own furniture which would not suit their new home. However, when the solicitor applied to draw down the funding, as approved, the council could not provide the money as it had well exceeded its allocation. As I said, the council was allocated €2 million but has already spent €2.6 million. As reported in a local newspaper, all of the necessary reports were supplied and almost three weeks ago, the family reached the sale agreed stage. They had a pre-mortgage meeting with Waterford council, engaged a solicitor and were told that they would receive the money within two to three weeks. Now they have been told that Waterford council has run out of Rebuilding Ireland home loan funding. This is only one story among many. This family is currently in limbo. The whole chain of events is now held up, with several parties affected.

It is clear that there has been a much greater demand for the loan scheme than initially anticipated. As a result, the scheme will require a further tranche of funds to be borrowed by the Housing Finance Agency if it is to continue. I ask the Minister of State to provide some positive news on the question of additional funding for Waterford City and County Council. Will a second tranche of finance be provided and if so, when? Is the future of this scheme secure? Can applicants continue to apply, sure in the knowledge that, if successful, they will receive the necessary finance? This scheme is a good news story. There are lots of people in this country who are not in a position to get a mortgage from the normal lenders but who are also above the income limits to qualify for social housing or HAP. I know a few people who have secured Rebuilding Ireland home loans and they are very pleased with terms and conditions, including competitive rates of interest over 25 to 30 years. The scheme is a perfect fit on paper for some, particularly first-time buyers, those who cannot get a mortgage from the main lenders and those who do not qualify for local authority housing. I ask the Minister of State to clarify the situation with regard to the scheme.

Minister of State at the Department of Housing, Planning and Local Government (Deputy John Paul Phelan): Information on John Paul Phelan Zoom on John Paul Phelan I will try to give the Deputy as much information as possible but I will have to revert to her with some specific details at a later date.

Following a review of the two existing home loan schemes, namely the house purchase loan and the home choice loan, the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, introduced a new loan offering, known as the Rebuilding Ireland home loan, in February last year to replace the existing schemes. When the new scheme was initially being developed, it was estimated that the draw down of loans under the scheme would be approximately €200 million over three years. However, as outlined by Deputy Butler, the scheme has proven to be far more successful than originally anticipated.

The Department of Housing, Planning and Local Government has been closely monitoring the progress of the Rebuilding Ireland home loan scheme and has been engaging with officials from the Departments of Finance and Public Expenditure and Reform on the scheme since October 2018 when it became clear that the rate at which loans were being approved was higher than originally anticipated. The Minister made a commitment on launching the scheme that he would seek further funding at an early stage, if necessary, given his belief in the scheme's potential. By the end of January, €106 million had been drawn down, which accounted for 53% of the available funding. At that point, €66 million would have been more consistent with the expectation of funds being drawn down over a three year period.

The Minister informed the Dáil on 29 January 2019 that the scheme had proven to be more successful than initially anticipated and would require a further tranche of funds. He further indicated that the Department was in discussions with the Departments of Finance and Public Expenditure and Reform on an extension to the scheme. A meeting with the Minister for Finance was scheduled for 4 February but had to be deferred until 5 March. At no time was the first tranche of funding depleted and following the meeting on 5 March, the Minister informed the Oireachtas Joint Committee on Housing, Planning and Local Government that local authorities could continue to accept applications, as discussions had commenced on further funding.

As of the end of January, €106 million had been lent, supporting 575 individuals and families to buy their first home. The Department is currently in discussions with the Departments of Finance and Public Expenditure and Reform regarding further funding for the scheme. The Central Bank is also being consulted. Specific allocations to local authorities for 2019 will be finalised when those discussions have concluded. In the meantime, the scheme remains open and applicants can be confident that this will continue to be the case. All local authorities should continue to receive and process applications, up to and including draw down of funding, as appropriate.

The Deputy outlined a specific case and many Members have come across similar cases. I will endeavour to get a more specific timeline on the extra tranche of funding for Deputy Butler. I hope I have provided some solace for families in similar situations. I accept that this is a very difficult time for the family referred to by Deputy Butler but I will try to get as specific a date as possible.

Deputy Mary Butler: Information on Mary Butler Zoom on Mary Butler I thank the Minister of State for the reply. I am delighted to hear that the scheme is still open but unfortunately Waterford City and County Council has well exceeded its initial allocation of €2 million. The council has actually used €600,000 of its own money at this stage. The Minister of State knows well that local authorities must balance their books and in that context the council needs to have some idea of the timeframe involved here.

Some local authorities have been more successful than others in terms of processing Rebuilding Ireland home loan applications. Would it be possible to redirect funds from those local authorities that did not utilise their full allocation to those which have exceeded their allocations? I urge the Department to look at those local authorities that have loaned a lot of money and exceeded their allocations to determine why this happened.

The focus must be on building houses and moving people into them. We are all agreed on that. That is what is important to every local authority, every Senator and Deputy in these Houses and every councillor on the ground. We need clarity on the Rebuilding Ireland home loan scheme although I accept that the Minister of State cannot provide it today. I welcome the fact that the scheme is still open but the situation is very difficult for the local authorities. If Waterford City and County Council goes ahead and allocates the aforementioned 11 mortgages that it has approved, will the Department guarantee that the council will be reimbursed?

Deputy John Paul Phelan: Information on John Paul Phelan Zoom on John Paul Phelan I will ask the Minister to write to the Deputy with the answers to her specific questions.


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