LAST UPDATE | 3 Aug 2019
DESPITE SAYING THAT on 9 July that an announcement would be made “very soon”, and not within months or weeks, the government still has not guaranteed its mortgage scheme for first-time buyers has secured funding into the future.
However, the Department of Housing has told TheJournal.ie that the lack of an announcement of additional funding “is not inhibiting the running of the scheme in any way”.
Controversy has dogged the Rebuilding Ireland Home Loan scheme in recent months, after demand for the low-interest mortgages far outstripped government expectations and it became clear it needed more money to keep it going.
Despite some people experiencing delays in their applications being processed, or delays in being able to draw down the funds to purchase their home, the government has repeatedly insisted that money is available to councils.
The RIHL is a government-backed mortgage for first-time buyers which you can avail of through your local authority.
The buyers can use the loan to purchase a new or second-hand property, or use it for a self build.
First-time-buyers can borrow up to 90% of the market value of the property, with maximum market values set at €320,000 in the counties of Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow, and €250,000 in the rest of the country.
The RIHL was originally launched with €200 million in funding borrowed by the Housing Finance Agency (HFA) to fund the scheme.
Concerns were raised in March that the funds for it had run out, and TheJournal.ie reported later that month that the loan scheme needed another €600 million to continue operating through the next three years.
TheJournal.ie also spoke to one family at risk of missing out on their ideal home because of the delays they faced in being accepted on the scheme with one local authority.
Minister for Housing Eoghan Murphy has admitted that the RIHL “has proven to be more successful than was initially anticipated”.
How soon is soon?
In a Dáil debate before the chamber went into recess for the summer, the government was pressed on when an announcement would be made on the future of the scheme.
Fianna Fáil’s Michael McGrath said that Minister Murphy had previously told the Dáil an instruction had been issued to local authorities to continue to provide funding for the scheme, despite no announcement yet made on the funds being provided.
He said: “They must accept applications, process them and continue to approve grants which will continue to be drawn down. However, his cannot go on forever. If we examine the figures, about 4,200 applications were assessed up to the end of May and slightly more than half have been approved.
A fraction of the approved grants have been drawn down. The overall sum drawn down is about €140 million. There is not, therefore, enough money in the pot to meet the funding requirements of approved applicants.
McGrath wanted to know where the “blockage” was and why the additional monies hadn’t already been provided.
Minister of State at the Department of Finance Michael D’Arcy replied that due to the higher-than-expected demand, the government had sought out more funds.
He said that the Department of Housing sought clearance for the additional funds from the Department of Public Expenditure on 14 June.
This request is subject to “normal deliberations”, D’Arcy said. He added that it’s anticipated a further announcement is expected “very soon”.
McGrath replied that he wanted to know what “very” meant.
“I ask the question because it seems that the entire process that was slow to begin with has slowed down further. That raises concerns that the slowdown has occurred because the budget and cash flow are being managed,” he said.
D’Arcy: “I am not trying to be glib but ‘very soon’ is not months and it is not weeks. The deputy can take…”
McGrath: “So is it days?”
Having the final word, D’Arcy said that the loan is offered at a superb rate, and he was confident the scheme could continue.
“While the tranche of funding was not there to meet the demand, I am satisfied that it will be there,” he added.
Next step
In response to TheJournal.ie, a spokesperson for the Department of Housing said: “The RIHL has proven to be more successful than initially anticipated, with some €140 million drawn down to the end of March 2019.
“The Department have been engaging with the Department of Public Expenditure and Reform with regard to the amount of a second tranche.
The first tranche of funding has not been exhausted, the Rebuilding Ireland Home Loan remains open to new applicants, and all local authorities are to continue to receive and process applications and issue loans. An announcement on the amount of additional funding to be provided is not inhibiting the running of the scheme in any way.
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