Dublin City Council plans to develop around 1,840 affordable-purchase homes across the city in the coming years.

Those include 233 homes at O’Devaney Gardens in Stoneybatter, where diggers and trucks are finally at work.

There are plans for affordable-purchase homes too in Poolbeg, Ballymun, Cherry Orchard, Belmayne, Bluebell and Oscar Traynor Road in Coolock.

Most of those are scheduled to be built by the end of 2026, says a recent council report.

Those timelines look ambitious. Some developments don’t yet have designs.

Still, at a recent meeting of the housing committee of Dublin City Council, the council’s housing manager said that councillors need to decide soon how to go about allocating those homes.

There are two broad approaches to deciding who gets affordable homes when demand from eligible households outstrips supply.

South Dublin County Council and Fingal County Council are already allocating affordable-purchase homes to eligible applicants on a first-come, first-served basis, based on when an application landed with them.

Meanwhile, the Land Development Agency allocates cost-rental homes through a lottery.

All the affordable-purchase homes built on public land are set to be subsidised through a shared-equity scheme. Under this, the council takes a stake of up to 20 percent in the home, while the homeowner funds the rest through a deposit and mortgage.

Critics of the shared-equity approach say that it can push up house prices and saddle people with more debt.

Hugh Brennan, CEO of the non-profit housing co-operative Ó Cualann Cohousing Alliance, says, though, that rapidly rising construction costs are making it impossible to deliver affordable homes without major subsidies.

Architect and housing commentator Mel Reynolds says that using a shared-equity scheme for housing developed by state agencies and not-for-profit projects is very different from doing it in the private market.

The end price of the homes built by housing co-ops and state agencies is controlled, so the benefit is passed on to the home buyer and the scheme isn’t likely to push up prices, says Reynolds. “It needs to be done within a structure where sales prices are controlled.”

Two schemes

The Affordable Housing Act 2021 says that the state, either through councils or the First Home Scheme, can buy a stake in a newly built home.

Under the Local Authority Affordable Purchase Scheme, the councils work together with the Land Development Agency and housing charities to develop homes, often on publicly owned land.

To help make the homes more affordable to a buyer, the council can take a stake of up to 20 percent in the home, which the homeowner can buy out at a later date, or can be recouped when the property is sold.

Homeowners can also avail of Help to Buy, which is a tax rebate to help homeowners to gather a deposit.

Brennan, CEO of the Ó Cualann housing co-operative, says that the homes it builds now need significant government subventions to make them affordable. That wasn’t the case a few years ago, he says.

As recently as 2019, Ó Cualann was able to sell new-build homes in Ballymun for €219,000 which it built on discounted council land. (It paid €1,000 per site). The government just also waived development levies which was worth around €30,000, says Brennan.

But now, after three years of construction inflation ranging from 14 percent last year to 7 percent this year, it costs around €310,000 to build a similar home, says Brennan.

“The people who are moving in at the moment in Dun Emer [in Lusk], the average cost of the three-bedroom house there, after the subsidy is €250,000,” he says.

If the cost of building a three-bed there was around €310,000, he says, the only way to bridge the gap between that and the €250,000 they want to sell the homes for, is for the council to take an equity stake.

The problem, says Brennan, is that the market value of a house is now less than the cost of building one. “So what do you do? Do you stop building?”

Another shared-equity scheme, the First Home Scheme, allows the state to take a stake of up to 30 percent of a privately developed home, or up to 20 percent if the homeowner is also availing of Help to Buy.

Private developers can sell homes for up to €500,000 in Dublin and new homeowners use the First Home Scheme to bridge the gap between the price of the home and what they can afford through savings and borrowings.

But critics of that scheme say it is likely to drive home prices up.

Reynolds, the architect, says shared-equity schemes in the private market risk doing that. “If you are going to do it, you have to be really careful that it doesn’t inflate prices.”

In the last construction boom, many who bought affordable homes ended up in negative equity, he says. “You need to be particularly careful when prices are high. It is the wrong time in the cycle for demand-side measures.”

TU Dublin housing lecturer Lorcan Sirr says: “The danger is that instead of making housing more affordable it could be argued this scheme merely helps people buy what’s unaffordable.”

The scheme also includes fees that kick in after year five, and these will mount up over the course of the mortgage, says Sirr. Those fees need to be paid on top of capital and interest repayment on the mortgage, he says.

Indeed if the state took an €80,000 stake in a home, that could accrue to additional charges of €39,800 to the home-buyer over a 30-year mortgage period.

Those fees don’t apply to homes purchased through the local-authority scheme, says a spokesperson for the Department of Housing. The other major difference is likely to be the price of the homes.

How much is affordable?

Each development is different so it is not yet possible to say how much the homes will cost.

The government’s housing strategy, Housing For All – which says it aims to support homeownership and increase affordability – says that councils should be able to provide affordable-purchase homes for sale for around €250,000 after the subsidy.

Fingal County Council is currently advertising affordable-purchase homes in Rush, which it says will be completed next year. Prices start from €228,000 for a two-bedroom house, after the council takes a share of the equity.

The amount of equity the council takes will also depend on the household income and how much they can borrow, according to the frequently asked questions.

Fingal County Council says that it will reserve 30 percent of the homes for people who have lived in its council area for more than five years. Allocations will then be prioritised by date of application, it says.

South Dublin County Council has published an infographic to help guide people through the process of trying to buy an affordable home. That says that it too will prioritise applicants according to the date of application.

The cheapest homes in Kilcarberry in South Dublin County Council are €341,000 and that requires a household income of €73,000, according to the council’s website.

That indicates a price of €292,000 for the home buyer based on four times the salary.

That is the price to the homeowner after the council takes a stake in the home.

The full price of the homes ranges from €341,000 to €385,000, says the website. The more expensive homes require higher salaries to purchase.

Could it be you?

Opportunities for homeowners looking for new homes at affordable prices in Dublin city are sparse. And demand for affordable-purchase homes is likely to be high.

At a meeting of the council’s housing committee on 16 June, councillors were updated on how its pipeline of these homes is going.

Some are scheduled for completion in 2023, but construction hasn’t started there yet. Others scheduled for completion by the end of 2026 don’t have designs done yet.

Still, council senior architect Martin Donlon indicated that the council would like to advertise some affordable-purchase homes fairly soon.

Councillors need to agree on a scheme for allocating 233 affordable purchase homes at O’Devaney Gardens as soon as possible, he said. “So that we have the eligible purchasers to progress through that scheme.”

According to the council report, builders are currently doing “enabling works” at O’Devaney Gardens and the affordable-purchase homes are due to be completed in 2026.

(The council is still looking into buying some of the private homes to use as cost-rentals too, said Donlon.)

The council will also deliver 170 affordable-purchase homes on council-owned land at Oscar Traynor Road in Coolock, said Donlon.

But the planning permission has been appealed to An Bord Pleanála, he said. “A decision is due in mid-July.”

Council housing manager Coilín O’Reilly suggested that at the next meeting of the housing committee meeting on 12 July the committee discuss how it will allocate affordable-purchase homes.

Councillors will have to decide whether it’s fastest fingers first, lotto-style draw, or some other system entirely.

Laoise Neylon is a reporter for Dublin Inquirer. You can reach her at lneylon@dublininquirer.com.

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