Dublin ‘affordable’ purchase permutations call purpose of scheme into question

Dublin’s housing market has reached the point where a three-bed semidetached house in Coolock priced at €475,000 is deemed “affordable” and its prospective purchaser, with an income of more than €106,000, is considered to be in need of State housing support.

Applications will open from July 16th for the city’s first affordable purchase housing scheme, outside the not-for-profit sector, since the last State programme was discontinued in 2011.

Prices have been set for the first 16 homes at Oscar Traynor Woods, an estate built on former Dublin City Council land in Coolock, which will eventually have 853 homes, 172 of them available for eligible affordable housing buyers.

A one-bed “maisonette” will cost €264,358 to €308,750, a two-bed mid-terrace house comes in at €355,760 to €427,500, and the three-bed semi at €399,731-€475,000. The variation in prices in each category is nothing to do with the size or style of a particular house, but the buying power of the eligible applicant.

Unlike the State-subsidised cost-rental scheme, which has after-tax income limits for eligible renters of €66,000 in Dublin and €59,000 elsewhere, the affordable house purchase scheme has no standard income limits. Instead, income eligibility is related to the market price of an individual house. In Oscar Traynor Woods the market price for a three-bedroom house has been determined at €500,000, at €450,000 for a two-bed and €325,000 for a one-bed.

In each case these maximum prices are multiplied by 85.5 per cent and then divided by four to establish the maximum income limits. That means applicants for the three-bed semi can earn up to €106,875, for the two-bed it’s €96,188 and the one bed €69,469. How much each buyer pays for a house, ie if it’s €399,731, €475,000 or a point somewhere in between, depends on their individual “purchasing power” – what they can get in a mortgage, their savings and their deposit.

Those with greater purchasing power get a higher equity stake in their house, up to 95 per cent, with the State retaining the other 5 per cent to reflect the discount. For lower income applicants, the State takes more equity with, for example, a 20.94 per cent stake being taken for the €355,769 two-bed.

However, once the purchase price to be paid and the State’s equity share (which is repayable on the sale of the property or after a maximum of 40 years) is figured out, all eligible applicants go into the same hat, to be selected by lottery after August 6th. Which makes this torturously complicated scheme also seem manifestly unfair.

The purpose of affordable purchase was to provide an opportunity for those who earn too much to qualify for social housing, but not enough to buy on the open market, to own their own home.

Even in this over-heated market, those earning more than €100,000 surely do not need this leg up, particularly when they could buy a similar non-subsidised house in the same area for less and retain 100 per cent ownership.