Local Authority Affordable Purchase Scheme:

What is the Local Authority Affordable Purchase Scheme?

This scheme helps people on certain incomes to buy new homes at reduced prices. These homes are in areas with the greatest housing need and where affordability is an issue. The local authority takes a percentage stake in your home that reflects the reduction in price. So, if you buy the home at a 20% discount, the local authority will have a 20% stake in your home.

You must buy back the local authority’s stake after 40 years or if you decide at any time to sell your home. You also have the option to repay it any time before this. This scheme is aimed at first-time buyers, but there are some exceptions.

Do I qualify for the Local Authority Affordable Purchase Scheme?

To qualify for this scheme, you must meet certain income, property, and residency criteria.

Your income must be below a certain level. Or you must have proof from a financial institution that you cannot get a mortgage for 85 % of the market value of the home.

The market value of the properties is agreed by the local authority running the scheme before the scheme is launched. The scheme will assess your income and could disregard certain social welfare payments.

Deposit and Savings.

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.

Property

You must be a first-time buyer or ‘fresh start’ applicant.

Age and residency

You must be over 18 years of age and have the right to live indefinitely in Ireland.

How much will my new home cost?

The price you pay for your new home and the size of the equity share the local authority takes in it are calculated by the local authority.

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.

How do I apply for the Local Authority Affordable Purchase Scheme?

Each local authority introduces its own affordable housing scheme and manages the application process. 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 as there is no central application system.

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.

What happens if my application for an affordable home is successful?

If your application is successful, you will get an offer letter from the local authority. Your information will be given to the developer, and you will be invited to visit the site and choose your home. You may need to pay a booking deposit at this point to secure the home. You will need to get a solicitor to do the legal work involved in buying your affordable home.

You will have a contract with the local authority, which sets out the rules about the equity share they have in your home. This contract is called an Affordable Dwelling Purchase

Arrangement. You will sign this contract before or at the same time as you sign your standard contract of sale with the developer.

Can I buy back the local authority’s equity share in my home?

You must buy back the local authority’s equity share in your home after 40 years. But you can buy it back before then and you can make repayments at any time. You can buy back the full equity share in one payment or pay it back partially as you can afford to. However, the minimum repayment is €10,000.

Does the equity share I have to pay back increase if the value of my house increases?

The answer is yes. If you decide to sell your home, you must pay off the equity share in your home. The equity share in your home is a percentage of the market value of your home. So, if property prices increase, the amount you must pay back will increase. For example, if you bought your property in 2023 for €380,000 and the local authority provided equity of 20% or €76,000 and you want to buy back the equity share in 2025 when the property is valued at €400,000, you will have to pay 20% of this, which is €80,000.