Kilrush Town Council :: Comhairle Baile Chill Rois

Affordable Housing

What is Affordable Housing?

The Affordable Housing Scheme is part of the Planning & Development Acts 2000 & 2002. These Acts require Builders/Developers who are applying for permission on zoned residential/mixed use land to make available a certain number of houses under the Affordable Housing Scheme.

What will be the price of a house under the affordable scheme?

The price of each house will vary depending on the house type and the particular development but will be subsidised and therefore there will be a substantial discount from the price payable for similar houses in the development. The subsidy will vary with each development.

Who qualifies under the scheme?

The main qualification under the scheme is that the repayments on a loan for a similar house at the full price would exceed 35% of the applicant’s net monthly income.

Let us say that the price of a house is €200,000. At current interest rates the monthly repayments would be €1,042.90.

If Mr. White’s net monthly income is €3,000 then Mr. White does not qualify (€3,000 x 35% = €1,050).

If Ms. Green’s net monthly income is €2,500 then Ms. Green qualifies (€2,500 x 35% = €875).

In the case of joint borrowers the above calculations are based on the principal earner’s income plus half of the second earner’s income.

Applicant’s income must be sufficient to meet mortgage repayments

This house is being sold under the Affordable Housing Scheme for €160,000. A 97% mortgage would be €155,200.

A rough guide to mortgage eligibility would be as follows:

Ms. White’s annual income is €30,000. Multiplied by 4.5 this would give a figure of €135,000 so Ms. White does not qualify.

Mr. Black’s annual income is €35,000. Multiplied by 4.5 this would give a figure of €157,500. Subject to loan approval by the Bank/Building society Mr. Black qualifies.

Are there any other conditions under the scheme?

  • You must not have previously owned a house.
  • You must occupy the house as your normal place of residence.
  • It is expected that you will obtain finance from an approved Bank or Building Society.
  • You must comply with the normal conditions in the Building Agreement applicable to the particular Development.
  • The Council will consider good estate management when allocating houses under the Scheme.
  • The Council will not allocate houses under the Scheme to persons it is satisfied are engaged in anti-social behaviour.

Where do I apply for a loan?

Successful applicants will receive a provisional offer from Clare County Council and should then apply for a loan to an approved Bank or Building Society.

There are three approved lenders at present:

What happens if I wanted to sell the house?

As the house is sold at a subsidised price a claw back applies for the first 20 years. Claw back means that if the house is sold within 20 years a certain amount of the proceeds of the sale must be paid to the local Authority. If a house is sold within the first 10 years then there is a 100% claw back and for each completed year of the ownership after the 10th year the amount of the claw back is reduced by 10% per annum until after the 20th year is completed, after which there is no claw back.

How is a claw back determined?

Claw back is based on percentages. Let us say that the sale price of the house is €170,000 but its market value is €220,000, which gives subsidy of €50,000 or 22.73%. Therefore the purchaser receives a discount of 22.73% off the market value of the house. If the house is sold within the first 11 years then 22.73% of the sale price must be repaid to the Council out of the sale, providing the net proceeds do not fall below the original sale price of €170,000 (i.e. the borrower does not experience negative equity). If the house is sold after 12 years then the clawback is reduced by 20%. So 22.73% X 80% = 18.18% is the amount of the clawback out of the sale price. Let us say the sale price is €260,000 X 18.18%=€47,268 is the amount of the claw back. Therefore the purchaser must pay €47,268 to the Local Authority.

How do I apply for inclusion in the scheme?

You should complete an "Expression of Interest” form available from Clare County Council.

What happens then?

Your name will be added to the Affordable Housing list. A more detailed form will be sent to you if houses become available in your preferred area. Dwellings are advertised in the local press as they become available. You may apply in areas other than those shown on your "Expression of Interest” form.

What happens if there are more applicants than houses?

The Council will assign houses based on it’s allocation scheme.

Should I engage a solicitor?

As is normal when purchasing a house you will be required to employ a solicitor when proceeding with the house purchase. At that stage you should discuss the legal implications of the Affordable Housing Scheme with your legal adviser to satisfy yourself that you are fully aware of all the requirements of the scheme.

Is there any other affordable housing option?

Clare County Council also constructs Affordable Housing schemes.

What are the differences between this and the Part V scheme?

  • The price of Council constructed houses is calculated on the actual construction cost of the properties. (This includes site cost, technical and legal fees etc. as well as building cost). This may be reduced by any site subsidy received from The Department of the Environment, Heritage, and Local Government.
  • Loans are issued by Clare County Council.

Income limits apply to Council loans as follows:

  • Single Earner : €40,000
  • Joint applicants: Principal earners income multiplied by 2.5 + subsidiary earners income must not exceed €100,000.

N.B. This is issued as a guide only and is not a legal interpretation of the schemes.

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