From Declan Breathnach, TD 31st May 2016
To ask the Minister for Environment, Community and Local Government why the banking sector is not willing to make mortgages available to persons who meet the eligibility and banking requirements under the new tenant purchase scheme as they are not satisfied with the conditions laid down under the scheme. [12409/16]
From Minister Simon Coveney Department of Environment, Community and Local Government
I propose to take Questions Nos. 105, 107 and 111 together.
The new Tenant (Incremental) Purchase Scheme came into operation on 1 January 2016. The Scheme is open to eligible tenants, including joint tenants, of local authority houses that are available for sale under the Scheme. To be eligible, tenants must meet certain criteria, including having a minimum reckonable income of €15,000 per annum.
The minimum reckonable income for eligibility under the Scheme is determined by the relevant housing authority in accordance with the detailed provisions of the Ministerial Direction issued under Sections 24(3) and (4) of the Housing (Miscellaneous Provisions) Act 2014. In the determination of the minimum reckonable income, housing authorities can include income from a number of different sources and classes, such as from employment, private pensions, maintenance payments and certain social welfare payments, including pensions, where the social welfare payment is secondary to employment income.
In determining reckonable income, the income of the tenants of the house, including adult children that are joint tenants can be included, as can the income of the spouse, civil partner or other partner/co-habitant of a tenant who lives in the house with them.
In order to ensure the sustainability of the scheme, it is essential that an applicant’s income is of a long-term and sustainable nature. This is necessary to ensure that the tenant purchasing the house is in a financial position, as the owner, to maintain and insure the property for the duration of the charged period, in compliance with the conditions of the order transferring the ownership of, and responsibility for, the house from the local authority to the tenant.
The financing of any house sold under the Tenant (Incremental) Purchase Scheme is a separate matter from the eligibility criteria for the scheme. In order to participate in the scheme, the tenant must, in the first instance, meet the eligibility criteria as set out in the relevant legislation, including having a minimum reckonable income of €15,000 per annum. If the tenant is deemed eligible under the scheme, he or she may fund the purchase of a house from one, or a combination of, own resources or a mortgage provided by a financial institution or a local authority house purchase loan.
My Department met with the Banking & Payments Federation Ireland during the course of the development of the new scheme and will continue to liaise with them as issues arise.
Section 48 of the Environment (Miscellaneous Provisions) Act 2015, which commenced on 1 January 2016, inserts a new section 3A into the Water Services Act 2014, subsection (9) of which provides that a housing authority shall not complete the sale of a dwelling under a tenant purchase scheme until the tenant provides to the authority a certificate from Irish Water confirming that any charge under section 21 of the Water Services (No. 2) Act 2013 in respect of that dwelling payable by the tenant has been paid. Therefore, tenants of local authority houses who wish to participate in the scheme must provide the relevant certificate from Irish Water, in order for the sale of the house to be completed.
Under the confidence and supply arrangement agreed in the context of facilitating a minority government, the Government is committed to introducing and supporting legislation in the Oireachtas, within six weeks of its appointment, to suspend domestic water charges for a period of nine months from the end of the current bill cycle. This is to allow for the Oireachtas to decide on the enduring funding model for Irish Water. I intend to publish the draft legislation shortly.
The new Tenant (Incremental) Purchase Scheme is in the very early stages of implementation and the Department is monitoring the operation of the scheme in consultation with housing authorities. In line with the commitment in the new Programme for a Partnership Government to make the scheme more attractive for social housing tenants and to raise new funds for housing development, it is intended to undertake a review of the scheme following the first 12 months of operation and to bring forward any changes to the terms and conditions of the scheme which are considered necessary based on the evidence gathered at that stage.