Family left in limbo over government home loan scheme set to lose out on buying house

A FAMILY WHO have put down a deposit on a home have been told that their Rebuilding Ireland Home Loan (RIHL) application won’t be approved until the government confirms the future funding of the scheme.

Gareth Harpur was hoping to sign on the dotted line for a new home with his partner and young child after applying for the loan scheme with South Dublin County Council at the beginning of the year for the loan.

Having received approval for the scheme in two other authorities (he was unable to find a suitable property they could afford within those jurisdictions), he was confident of approval in this council’s jurisdiction and put down a deposit on a house in south-west Dublin on 3 March.

The RIHL was launched by the government in February 2018. It’s a government-backed mortgage for first-time buyers which prospective homeowners can avail of through local authorities. Applicants must have at least 10% of the value of home in a deposit.

As it’s a government scheme, the criteria for eligibility is similar no matter where you are – with exceptions on the value you can claim in more expensive areas – but it’s up to each local authority to administer it. 

In the days after Harpur put the deposit down, it emerged that the demand for the scheme had been so high that the government would need to secure hundreds of millions in additional funding to continue it in the future.

TheJournal.ie reported last month that the Department of Housing is seeking approval for a further €600 million to keep the scheme going through to 2021, but this hasn’t yet been confirmed. The opposition said that this news had left people “anxious” and “in the dark”.

After these news reports in March, Harpur reached out to local representatives and to the council.

In an email reply to him last month, a council official told him: “South Dublin County Council are still receiving applications under Rebuild Ireland Home Loans. As South Dublin County Council has not yet received its allocation for 2019 we are not in a position to approve any loans at this time.”

Due to the competitive nature of the market, Harpur fears that he and his family won’t be able to find another suitably priced property without the loan – and will be left paying expensive rent indefinitely.

“We’re stuck now,” he told TheJournal.ie. “We received contracts last Monday to be signed and returned within 21 days or the house will be relisted and our deposit returned.

No one has listened to us… This is the last house we can get. We’re screwed if the minister doesn’t come out soon with funding for this scheme or the council just issues us with an approval.

‘We need to clear this up once and for all’

Issues around the viability and future of the scheme were raised in the Dáil this week by Fianna Fáil’s housing spokesperson Darragh O’Brien.

He said: “I imagine the Minister has heard in recent days of testimony from several individuals throughout the country from south Dublin to Waterford.

People applying to several local authorities have been unable to get the funds. The Minister says the scheme is open and is accepting applications. The local authorities may be processing applications up to the point of the issuing of the loan offer, but they are not processing them any further and that is the issue.

O’Brien added that in many instances people who’ve made an offer on a house cannot drawdown the loan. 

“South Dublin County Council has not permitted drawdown of mortgages since December last,” he said. “Why is that?”

Minister for Housing Eoghan Murphy said that money is available under the scheme this year, and that “local authorities need not wait for their allocations for 2019″. 

He said if he hears examples of local authorities withholding funding, his department contacts that council to find out why. 

“I am very sorry for the confusion that is in some local authority areas,” Murphy added “The confusion is not because of anything the Department of Housing, Planning and Local Government or the Housing Finance Agency are doing.”

O’Brien said back to the minister that he welcomed this clarification, and that it is now vitally important to avoid confusion on the matter.

“I call on the Minister [Murphy] to update the House and give us some timeframe for when he envisages additional funds will be allocated and when the 2019 allocations will be made.

People are making loan applications but are unsure whether they will ever be able to get to the stage of drawdown. We need to clear this up once and for all.

Murphy replied that it makes him angry when he hears of a couple or an individual who are trying to buy a home, who’ve been given mortgage approval but are then unable to drawdown the mortgage. 

“We are not to be getting in the way of people buying homes,” he added. “I issued a circular to local authorities recently clarifying that the scheme is still open and that they are still to continue to process applications.”

A spokesperson for the Housing Department told TheJournal.ie: “The Minister made clear that local authorities were advised that the scheme remains in operation and that they should continue to receive and process applications including issuing loans. Where it is brought to the Department’s attention that a local authority may not be doing this, it will engage with the local authority on the matter.”

In a statement to TheJournal.ie, South Dublin County Council said that applicants who it has approved for the scheme can draw down funds, and said applications are still being “processed” as it awaits news on its 2019 funding allocation.

“Applicants approved by the Council under the Rebuilding Ireland Home Loan Scheme in 2018 and who have not yet drawn down funds can still do so within the terms of their loan approval,” a spokesperson said. “The Council is awaiting notification of its 2019 allocation from the Department of Housing Planning & Local Government but applications are still being accepted and processed under the Scheme.”

Without either clarity on future funding from the government, or approval from the council, Gareth Harpur and his family may now lose the chance to purchase their chosen home in just over a week’s time.