Council to introduce housing incremental purchase scheme

CLARE County Council is to introduce a new scheme, which will allow people to start on the path to home ownership.
The Department of the Environment, Heritage and Local Government introduced the new incremental purchase scheme (IPS) in June, with the objective of the scheme to make it possible for households, with income substantially lower than that required for affordable housing, to own their own home.
Bernadette Kinsella director of services for housing with the council, explained the department has indicated that the existing tenant purchase scheme is to be replaced by a new scheme based on incremental purchase principles within two years.
She said that the scheme applies to new houses only and the council must designate eligible properties under the scheme. Local-authority tenants have five years from the date that they are appointed tenants to purchase under the new scheme. Tenants, who wish to purchase under the IPS, must have a minimum income of €15,000 per annum to be eligible for consideration under the scheme and must also meet credit criteria laid down by the department.
“Unlike the current tenant purchase scheme, the purchase price of a property designated under the IPS is not related to market value. Instead, the price will be based on the attributable building and development cost of the building. The purchase price of a property is also subject to discounts based on the purchaser’s income, so that a household with an income level of less than €20,000 would see a 60% discount applicable, a household with an income level of between €20,000 and €30,000 would be entitled to a 50% discount, while a household income level of more than €30,000 would allow a discount of 40%,” she explained.
Following the sale of a property under the IPS, a charge is placed on the property in favour of the local authority. This charge essentially equates to the discount given to the purchaser and is reduced by 2% each year after the sale of the property, with the exception of the first five years after the sale. In the first five years, the reduction on the charge does not take place and instead, a reduction of 10% takes place at the end of year five.
In addition, if a purchaser under the IPS wishes to sell their property, the local authority has first refusal on buying back the property. The sale price in this instance will equate to the market value less the remaining charge on the property in favour of the local authority.
“As is the case with the tenant purchase scheme, discounts may be given for improvements carried out to the property. If the property is not purchased by the local authority, the consent of the authority to the sale is required. They may refuse consent if the sale price is less than the market value of the property, if the purchaser is or has been involved in anti-social behaviour, or if the sale would not be in the interest of good estate management, or if the sale would leave the vendor or dependants without adequate housing. If the property is sold to a party other than the local authority, the vendor must repay the authority an amount equal to the remaining charge on the property in favour of the authority,” she added.
Councillor Gerry Flynn said this would be a useful scheme for the council as it would allow them to change the status of houses from affordable housing effectively to rent-to-buy houses. “So it’s a nice under-the-radar scheme to change the status of houses,” he commented.
Councillor Oliver Garry asked if the vetting system for purchasers would be the same as with tenancies.
“In light of what happened in other counties where certain people moved into estates and others had to move out, we need to be sure about this,” he said. Ms Kinsella said that the same criteria would apply.
Chairperson of the housing, social and cultural services SPC with the council, Councillor Patricia McCarthy, said there are some questions, which need to be asked about the scheme.
“Given that we have some reservations, we should write to the departments stating our concerns. We should refer to previous legislation which gives control to the local authority of second and subsequent house sales,” she commented.