Gormley announces new home ownership opportunity for tenants of local authority flats

Minister for the Environment, Heritage and Local Government, John Gormley, T.D., today (2 June 2009) announced the introduction of new legislation to enable tenants renting local authority flats to buy their homes

The Minister intends to introduce the legislation through an amendment to the Housing (Miscellaneous Provisions) Bill 2008, to be introduced at Dail Committee Stage of the Bill (commencing on 9 June).

Local authority tenant purchase has been a feature of the Irish housing system since the 1930's with the first national scheme being introduced in 1973 and the current scheme in operation since 1995, but until now, the sale of flats has not been permitted. The Minister today said that "tenant purchase has had a very positive impact on social housing in Ireland. It has offered lower income households the opportunity to put down long terms roots in their areas, creating sustainable communities, and social stability. I want now to extend the scope of the scheme and to offer tenants living in local authority apartments similar home ownership opportunities to those that are enjoyed by tenants in local authority houses. This will enable apartment tenants, who cannot afford to purchase a dwelling from their own resources but could sustain home ownership in the long run, to buy their current accommodation, with an appropriate degree of support from the State."

The broad terms of the proposed scheme are set out in the Appendix attached.  The detailed features will be addressed in Regulations to be made following the enactment of the legislation.

ENDS

29/05/09

Appendix

Scheme for the Tenant Purchase of  Local Authority Flats

In broad terms the proposed scheme will operate as follows:

• Local authorities will be given power to designate suitable
  apartment complexes for the purposes of the sale of apartments to tenants, following a proposal to designate and a tenant plebiscite, provided there is sufficient support amongst tenants for designation.
• The local authority will transfer ownership in the apartment
  complex, including common areas, to a management company to be established by the authority.
• The management company will lease-back all of the apartments to
  the local authority.
• The sale of individual apartments will be given effect through
  the local authority assigning the lease to the tenants under incremental purchase arrangements (already provided for in respect of other dwellings under Part 3 of the Bill, as passed by the Seanad).
• Tenants of local authority apartments will thus be able to
  purchase their homes for a proportion of the market value (the proportion will be specified in Regulations to be made in due course), with a charge being placed on the property in favour of the local authority for the portion of the equity not paid for by the purchaser - this charge will decline at a rate of 2% per annum.
• If the tenant purchaser wishes to re-sell the apartment at any
  stage during which there remains a charge on the property, the authority has first refusal on buying it back.  If the authority declines to buy back the apartment, the tenant purchaser may sell it on the market, in which case he or she must pay the authority the value of the outstanding charge on the property.
• The Bill will provide the framework for the arrangements,
  allowing some of the terms, such as the proportion of the market value to be paid and the duration of the charge, to be addressed in Regulations.

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