SUMMARY
Grant / Support Name: Local Authority Affordable Purchase Scheme
Provider: Local authorities
Value: Between 5% and 40% savings on the cost of your new home
Overview: The Local Authority Affordable Purchase Scheme helps people on moderate incomes to buy new homes at reduced prices with the local authority taking a percentage stake in your home that covers the reduction in price.
Eligibility:
- To qualify for the scheme your income must be below a certain level relative to the cost of the home you want to buy.
- You also must be a first-time buyer or fresh-start applicant i.e., divorced, separated or having gone through personal insolvency or bankruptcy.
Special Conditions:
- You must have the right to live indefinitely in Ireland.
- You must live in the property as your normal place of residence.
- You must have a minimum deposit of 10% of the purchase price of the home. However, if you have savings above a certain amount, you may not qualify for the scheme.
- You must buy back the local authority’s stake after 40 years or if you sell your home, but you can repay it any time before this.
Tax Implications: There are no tax implications
ARTICLE
The Local Authority Affordable Purchase Scheme is designed to help people on moderate incomes to buy a new home at reduced prices. The local authority then takes a percentage stake in your home based on the reduction in price.
New homes under this scheme are located in areas with the greatest housing need and where affordability is an issue.
The scheme is open to you if you are a first-time buyer or ‘fresh start’ applicant. You must buy back the local authority’s stake after 40 years or if you sell your home. You can however, also choose to repay the local authority contribution before this, in which case their percentage stake will revert to you.
The price you pay for your new home and the equity share the local authority takes in it are calculated by the local authority and takes into account your maximum mortgage capacity and the minimum price set for the home by the local authority. These calculations are done in accordance with regulations.
The market value of the property is agreed by the local authority running the scheme before the scheme is launched.
The maximum equity share the local authority will take in your home is 40% and the minimum is 5%. You can get a mortgage from a bank or financial institution for your stake in the home. The Local Authority Home Loan and the Help to Buy Scheme may also be available.
To qualify for the scheme your income must be below a certain level relative to the cost of the home you want to buy. This is calculated by multiplying your gross annual income by four. This figure is known as your 'purchasing power' and it must then be less than 85.5% of the open market value of the affordable home. Alternatively, you must have proof from a bank or financial institution that you cannot get a mortgage for 85.5% of the market value of the home. This may be for a number of reasons, for example, because of your age.
In addition, you will need a minimum deposit of 10% of the home's purchase price. However, if you have substantial savings, it might affect your eligibility. You can have enough money to cover the deposit plus an additional €30,000. Any savings beyond this are added to your purchasing power, and if your total exceeds 95% of the home's market value, you won't be eligible for the scheme.
The scheme only applies to properties that are bought as your home. As well as being either a first-time buyer or ‘fresh start’ applicant, you must be over 18 years of age to apply and have the right to live indefinitely in Ireland.
HOW TO APPLY
Each local authority manages the application process in their area. When homes are available under the scheme they will be advertised on the local authority's website and in a local newspaper.
The advertisement will include details about the scheme including how and when to apply. You apply for affordable homes as they become available and are advertised, but there is no central application system. You can, however, find a complete list of available properties on the Affordable Homes website, see the link below
In most cases, you will apply online where you will input your information and upload any additional documentation. In the application, you will need to:
- Provide your personal information, such as, your name, date of birth and PPS number
- Confirm you are a first-time buyer or a fresh-start applicant
- Provide proof of your gross annual income
- Provide evidence of a deposit and any savings, for example, bank statements
- Provide evidence of how you are going to pay for the home, for example, mortgage approval in principle or a mortgage calculator
- Provide proof of your right to live to Ireland
- You should apply for homes that you can afford with the scheme and that suit the size of your household. You must submit your application by the closing date for the scheme.
LINKS
You can find a list of local authorities at https://www.gov.ie/en/publication/942f74-local-authorities while the Affordable Homes website can be accessed at https://affordablehomes.ie
