A pilot rent-to-buy scheme announced by Dublin City Council today could be rolled out in local authorities across the country if it proves successful.
Minister for Housing Michael Finneran said he will be examining a report - due by the end of the year - on the pilot scheme to see if it is viable as an option for local authorities that have excess affordable properties on their books.
"I’m going to review this at the end of the year; I’m going to get a report from Dublin City Council. If there are other local authorities out there at that particular time and we see that this is a success and they have unsold affordables and they have tried all the options to dispose of them in the way that traditionally would have been the case, then at that stage I will make a decision but I'm not making any firm decisions today on that."
Under the rent-to-buy scheme for affordable housing units, the first time such scheme to be offered by a local authority, tenants agree to a fixed purchase price with the council, and can rent their home for up to three years.
If they opt to buy during that time, some 80 per cent of rent paid will be taken off the price with the other 20 per cent going on administration.
“Most of the arrangements there are fixed. The price is fixed from the day that they go in, their rent is fixed and of course the term of the lease is there for the three years so at the end of it even if house prices have gone up by 20 or 30 per cent the person who rented on day one will get that price that was agreed on the day they went in," Mr Finneran said.
“The downside is that if the house prices go down then you wouldn’t expect people to buy so that’s where we have left the out clause - they can walk away if they feel that the price is not appropriate at that particular time.”
The Minister for the Environment, John Gormley, who officially unveiled the scheme today said there had already been huge interest in the rent-to-buy scheme.
“I understand the phones are ringing now in Dublin City Council - there’s huge interest in this particular initiative, and it really gives people the freedom to rent a property if they so wish at an affordable price, and if they so wish thereafter that rent can be used then to purchase the property so there is great flexibility and people can actually try out the property in advance to see if they actually want to move in."
Tony Flynn, senior executive officer in housing and residential services in Dublin City Council, said the scheme was brought about as a result of the council looking for additional options for affordable housing applicants to make properties available for them.
“We had a large marketing drive last year in 2009 when we sold 240 affordable housing properties. A significant amount of people on our affordable housing panel were demonstrating to us that they had two main concerns. One was the flux in the housing residential market where property prices were falling and two that they found it difficult to get money to get a deposit as credit policies for loans were changed.”
Following discussions with the Department of the Environment the pilot rent-to-buy scheme was decided .
There are currently around 115 unsold properties in Dublin City Council’s affordable housing portfolio, of which 91 are being made available for rent-to-buy in Prospect Hill in Finglas, Herberton in Rialto and Park View in Poppintree. Priority will go to those already on the council’s affordable housing list.
Both Fine Gael and the Labour Party welcomed the introduction of the scheme and called for it to be extended across the country.
"The sooner this pilot scheme is rolled out nationwide the better so that these properties can become occupied. We cannot continue to have unoccupied properties, like the 91 properties Dublin City Council has lying empty for years, while the demand is so high for the need for housing," said Fine Gael housing spokesman Terence Flanagan.
Such a view was echoed by the Labour Party. "With well over 1,100 vacant residential properties languishing on local authority books, it is clear that we need a national rent-to-buy scheme so that people who need a home can get one. Such a scheme would need to done in an innovative and structured, backed up by hard data on property values and house prices," said the party's housing spokesman Ciaran Lynch.
Dublin City Council has been asked to prepare and submit a report on the operation and success of the pilot before the end of the year to the Minister for the Environment John Gormley.