Tenant (Incremental) Purchase Scheme 2016 – Buying your local authority home

RomaineScallySolicitors > > Tenant (Incremental) Purchase Scheme 2016 – Buying your local authority home


Question- I have been living as a tenant in my local authority house for over twenty years now.  I heard that there is a new scheme available to tenants to purchase their local authority houses.  Is this correct?

A – In January 2016, a new scheme for the purchase of existing local authority houses came into effect.  If you are a local authority tenant living in a local authority house that is available for sale from the local authority under the scheme and you meet the eligibility criteria, you can apply to purchase your house.  Not every type of property is included in this scheme however.  There are certain exceptions and these include apartments (a separate purchase scheme is available for apartments), houses that have been specifically designated for occupation by elderly persons, houses that have been specifically designated in a group setting for occupation by members of the travelling community and houses in a private development transferred to the local authority by the developer.  Your local authority can tell you if your type of property is included in the Scheme.  We can say however at the outset that you will only be eligible if you are a local authority tenant living in your house but you must however be in receipt of some form of social housing support for at least a year prior to your application and must have a minimum gross annual income of €15,000.00.  You will pay the market value of the house less a discount.  Depending on income, the discounts will vary between 40% and 60%.  Your local authority will also place a charge on your house called “an incremental purchase charge”.  This charge will be equal to the discount you get on the price of the house.  The charge will remain in place for 20, 25 or 30 years (depending on the discount given).  Each year, the local authority will reduce the charge by 2%.  At the end of the 20, 25 or 30 years the charge will be zero as long as you obey the terms and conditions of the Scheme.  You must live in the house as your normal place of residence and get agreement from your local authority if you want to sell, let or sublet the house.  You will be able to resell your house at any time if your local authority agrees.  However, if you sell before the end of the 20, 25 or 30 years you will have to pay back the value of the outstanding charge on your house to your local authority.  Like all homeowners, you will be responsible for maintaining and carrying out repairs on your house from the date you buy it.  You will also have to get and keep adequate property insurance on your house and pay for this yourself.  The local authority can refuse to sell the house in particular circumstances such as to tenants or household members involved in anti-social behaviour or with rent arrears.  In order to apply, you must fill out a Tenant (Incremental) Purchase Scheme Application Form which you can get from your local authority.  You must give proof of your income and show your local authority how you intend to pay for the house.  You must also give the local authority any other information it asks for to support your application.  The financing of the purchase of the house is a matter for you and all purchasers.  However, you may qualify for a Local Authority House Purchase Loan and you should make enquiries in this regard.  We hope that this has been helpful and we wish you the best of luck with your purchase.


Question – I live in an apartment owned by the local authority.  I have heard that there is a special scheme in place to allow tenants to buy their local authority apartment as opposed to a house.  Can you clarify if this is the case?

 A – A Scheme to assist tenants in purchasing apartments came into effect on 1st January 2012.  There are certain restrictions.  For an apartment complex to be eligible for designation for tenant purchase, it must comprise at least five apartments (other than community apartments), not contain retail units or apartments designated for older people, and satisfy the criteria set out in Section 51 of The Housing (Miscellaneous Provisions) Act, 2009.  In addition, at least 65% of tenants in the complex must support designation of the complex. When apartments are being sold in a designated complex, the housing authority transfers ownership of the entire complex to an apartment owner’s management company.  The management company immediately leases all the apartments back to the authority for continued letting to tenants who will then have the option of buying them from the local authority.  Sales follow the incremental purchase model with discounts of 40%/50%/60% off the purchase price depending on household income.  There is also a local authority charge which reduces by a set proportion each year.  Before apartments are sold, housing authorities have to undertake a considerable amount of preparatory work before they can sell individual apartments to tenants.  This work includes, assessing the suitability of selected apartment complexes, establishing annual maintenance costs in order to calculate annual service charges for people buying apartments and consulting tenants and conducting a vote.  As in the previous case, if you wish to commence an application to purchase, you should contact the housing department of your local authority.  We wish you the very best of luck if you decide to proceed.  You will also need a solicitor and should consult with a solicitor as soon as possible once you ascertain that you are eligible under the Scheme.


Question – I am in the process of applying to purchase my local authority house.  I believe that I am eligible to apply and want to know where is the best place to borrow from?  I wonder if you could give some guidance in this matter.

 A – You may be eligible to borrow from the local authority itself and if so, you should check their rates.  Given some of the competitive rates available for purchasers, especially first time purchasers now from the lending institutions, their rates may not be any more favourable.  You should most certainly shop around.  There are a number of attractive options and indeed incentives to first time buyers.  Just recently, the Minister for Housing has announced a number of initiatives including a Government backed Mortgage Scheme for first time buyers struggling to obtain finance.  Under the Scheme, a person or couple can borrow up to 90% of the value of a new, second hand or self-build home to a maximum of €320,000.00 in the greater Dublin area, Cork and Galway, and up to €250,000.00 for the rest of the country.  Borrowers will pay a fixed interest rate of 2% to 2.25% for 25 – 30 years.  Income cannot exceed €50,000.00 for a single person or €75,000.00 for a couple.  The idea is to take the risk out of mortgage loans for first time buyers because the rate will be fixed for the duration of the loan and first time buyers will have the certainty of knowing what their outlays are every month without the worry of huge fluctuations.  Now, many people who might have been refused loans from the regular Banks or Building Societies because of the fluctuations in interest rates, will now be eligible to get loans.  These are good rates of interest and some €200 million has been set aside for the first part of the Scheme.  The Scheme is due to come into play on February 1st and is designed exclusively for first time buyers.  You will need to apply through your local authority who are overseeing the Scheme.  Obviously you will have to qualify but on the basis that you do qualify under the Scheme then, you may be eligible for a subsidised loan at an interest rate which is secured for the duration of the mortgage.  We hope that this has been helpful and we wish you the very best of luck.

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