Galway City Council is facing a major row at a local authority meeting this afternoon after agreements to purchase private houses in the city collapsed due to a €40 million lack of funding.
Vendors are now counting the cost of expensive second mortgages, bridging loans and wasted solicitors' fees as many had traded up on foot of the deals with the council. The knock-on effect has seen owners of the trade-up property also hit, as the purchase chains snapped.
Under the housing acquisition programme 2007, the council has been buying up houses and apartments in private estates around the city, which would then be rented out to local authority tenants. It is understood the programme was based on Government funding of €60 million, but the figure drawn down was just over €20 million, causing the collapse of a series of deals.
While the council has bought 62 units and has committed to proceed with the purchase of another 55, it has reneged on agreements to buy about 25 more. In all cases, purchase prices were agreed and solicitors forwarded contracts to the council, which had paid booking deposits. The council had categorically denied the existence of the 25 deals or that it had pulled out of any. However, officials were forced to finally admit the collapse of deals last week.
Many vendors have still not been told officially that the purchases have fallen through, and some have accused the council of direct dialling their mobile phone message minders to avoid speaking to them. Some have bought a new home and others have signed contracts.