Dublin council to reduce affordable house prices...
DUBLIN CITY Council is to discount its total stock of affordable homes to get rid of a backlog of 300 unsold houses that are costing the council upwards of €300,000 a month in bridging loans and fees.
The council is to offer further discounts of about 25 per cent on houses it had already discounted by up to 35 per cent of the original market price to compete with developers’ discounts.
Developers must provide 20 per cent of any new housing estate or complex for social and affordable housing. A discounted price for the affordable units is agreed on the market price. The discount in Dublin is generally in the region of 30 – 35 per cent.
The council gives the developer names of people who are eligible to buy an affordable house. If two affordable house buyers reject the house or apartment, the council is obliged to buy it from the developer at the agreed discounted price. In a rising market, this system worked well. However, now that house prices are falling, developers are discounting private houses in the same estates to less than the price of the affordable houses. Buyers of affordable houses must pay a “claw-back” to the council of the percentage of discount they received if they sell their house within 20 years.
Private buyers are not subject to such restrictions and so the incentive to buy through the affordable scheme has greatly diminished.
To date, the council has had to buy 300 homes from developers because they were rejected by buyers. The council is paying about €1,000 a month in bridging loans on each of these units. However, the council is facing even greater debts as it has a total of 630 affordable homes on offer to applicants.
If it was forced to buy the remainder of these homes through further rejections from applicants, it would be paying monthly fees in excess of €630,000.
The council releases affordable homes for sale in a number of tranches each year. In its most recent sale last September and October, the council offered 350 affordable homes. These offers were rejected in 283 of cases and half these did not even respond to the council’s offer, according to its executive manager, Peter Ayton.
“In some parts of the city, there is very little difference between the market value and the affordable price. When the two prices merge, it’s a no-brainer – people won’t buy the affordable unit,” Mr Ayton told councillors at a special housing meeting yesterday.
The council could not afford to keep servicing the increasing debts on houses it could not sell, Mr Ayton said. It intended to offer reductions on houses, in the region of 25 per cent, to achieve a quick sale.
To fund this reduction, the council plans to accept cash instead of affordable units in future deals with developers.
While this is permitted under housing legislation, the council has had a policy of not accepting money in lieu of the 20 per cent social and affordable housing to ensure a good social mix was created in any new estate.
If the council has no takers after it reduces the prices of the properties, it will offer them for private sale to people who would be eligible for the affordable housing scheme but who had not applied.
If some units remain unsold after this process, the council proposes to use these as rental accommodation, for people qualifying for rent assistance, until the market recovers and they can be sold.
The council is also seeking talks with the Department of the Environment in relation to introducing a new scheme, whereby people could rent one of the properties for a number of years before buying and have the rent they paid offset against the purchase price.
A number of councillors suggested that some of the 630 homes be used for social housing. However, Mr Ayton said the council had already allocated its full budget for social housing and hadn’t “another bean” to spend.
Price gap: new reduced market prices rival those that are discounted
DUBLIN CITY Council has admitted it is offering “little or no discount” to buyers of affordable housing, because of the fall in property prices.
In general, the discount price at which an affordable house will be offered is negotiated with the developer before the estate or the apartment complex is built. Developers have, in recent months, been heavily discounting private houses in estates. This removes the incentive to buy an affordable house.
The council’s housing department yesterday gave several examples where discounts given by developers have made the price gap between affordable and private housing negligible in the context of a long-term mortgage.
In the Royal Canal Park development in Ashtown, Dublin 15, two-bedroom apartments were originally offered for private sale at €375,000 and at an affordable discount price of €264,000-€111,000 lower.
The same apartments are now being offered for private sale at €266,000, a difference of just €2,000 on the affordable home. For the discount, the affordable home buyer is locked into a deal with the council for 20 years.
A similar situation exists in Clare Village, a development off the Malahide Road in Dublin 13.
There the market price of a three-bedroom unit was €365,000 and the affordable price was €285,000. Now the market price is just €290,000.
The council says similar situations exist across the city. The council intends to further discount affordable homes by about 25 per cent and will shortly be launching a new marketing campaign at www.ahome4u.ie.
Report by OLIVIA KELLY - Irish Times.
DUBLIN CITY Council is to discount its total stock of affordable homes to get rid of a backlog of 300 unsold houses that are costing the council upwards of €300,000 a month in bridging loans and fees.
The council is to offer further discounts of about 25 per cent on houses it had already discounted by up to 35 per cent of the original market price to compete with developers’ discounts.
Developers must provide 20 per cent of any new housing estate or complex for social and affordable housing. A discounted price for the affordable units is agreed on the market price. The discount in Dublin is generally in the region of 30 – 35 per cent.
The council gives the developer names of people who are eligible to buy an affordable house. If two affordable house buyers reject the house or apartment, the council is obliged to buy it from the developer at the agreed discounted price. In a rising market, this system worked well. However, now that house prices are falling, developers are discounting private houses in the same estates to less than the price of the affordable houses. Buyers of affordable houses must pay a “claw-back” to the council of the percentage of discount they received if they sell their house within 20 years.
Private buyers are not subject to such restrictions and so the incentive to buy through the affordable scheme has greatly diminished.
To date, the council has had to buy 300 homes from developers because they were rejected by buyers. The council is paying about €1,000 a month in bridging loans on each of these units. However, the council is facing even greater debts as it has a total of 630 affordable homes on offer to applicants.
If it was forced to buy the remainder of these homes through further rejections from applicants, it would be paying monthly fees in excess of €630,000.
The council releases affordable homes for sale in a number of tranches each year. In its most recent sale last September and October, the council offered 350 affordable homes. These offers were rejected in 283 of cases and half these did not even respond to the council’s offer, according to its executive manager, Peter Ayton.
“In some parts of the city, there is very little difference between the market value and the affordable price. When the two prices merge, it’s a no-brainer – people won’t buy the affordable unit,” Mr Ayton told councillors at a special housing meeting yesterday.
The council could not afford to keep servicing the increasing debts on houses it could not sell, Mr Ayton said. It intended to offer reductions on houses, in the region of 25 per cent, to achieve a quick sale.
To fund this reduction, the council plans to accept cash instead of affordable units in future deals with developers.
While this is permitted under housing legislation, the council has had a policy of not accepting money in lieu of the 20 per cent social and affordable housing to ensure a good social mix was created in any new estate.
If the council has no takers after it reduces the prices of the properties, it will offer them for private sale to people who would be eligible for the affordable housing scheme but who had not applied.
If some units remain unsold after this process, the council proposes to use these as rental accommodation, for people qualifying for rent assistance, until the market recovers and they can be sold.
The council is also seeking talks with the Department of the Environment in relation to introducing a new scheme, whereby people could rent one of the properties for a number of years before buying and have the rent they paid offset against the purchase price.
A number of councillors suggested that some of the 630 homes be used for social housing. However, Mr Ayton said the council had already allocated its full budget for social housing and hadn’t “another bean” to spend.
Price gap: new reduced market prices rival those that are discounted
DUBLIN CITY Council has admitted it is offering “little or no discount” to buyers of affordable housing, because of the fall in property prices.
In general, the discount price at which an affordable house will be offered is negotiated with the developer before the estate or the apartment complex is built. Developers have, in recent months, been heavily discounting private houses in estates. This removes the incentive to buy an affordable house.
The council’s housing department yesterday gave several examples where discounts given by developers have made the price gap between affordable and private housing negligible in the context of a long-term mortgage.
In the Royal Canal Park development in Ashtown, Dublin 15, two-bedroom apartments were originally offered for private sale at €375,000 and at an affordable discount price of €264,000-€111,000 lower.
The same apartments are now being offered for private sale at €266,000, a difference of just €2,000 on the affordable home. For the discount, the affordable home buyer is locked into a deal with the council for 20 years.
A similar situation exists in Clare Village, a development off the Malahide Road in Dublin 13.
There the market price of a three-bedroom unit was €365,000 and the affordable price was €285,000. Now the market price is just €290,000.
The council says similar situations exist across the city. The council intends to further discount affordable homes by about 25 per cent and will shortly be launching a new marketing campaign at www.ahome4u.ie.
Report by OLIVIA KELLY - Irish Times.