The Government’s proposed new housing legislation will include a plan to cap the price of affordable housing using seven different rates across the country.
This will apply to the shared equity scheme where the State would take a stake of up to 30% in a home to keep the price affordable.
The first-time buyer would take out a mortgage for the remainder of the cost.
The cap for Dublin city and Dún Laoghaire could be set at €450,000.
The cities of Cork and Galway would have a cap of €400,000, with Limerick city at €350,000, and Waterford city listed as €250,000.
These caps must still be signed off by the Central Bank.
The Affordable Housing Bill was approved by Cabinet today.
Minister for Housing Darragh O’Brien pledged it would help deliver up to 6,000 affordable homes on State lands within four years.
The first scheme under the bill is expected to see 50 homes completed in Co Cork this year.
Furthermore, 414 new cost rental tenancies will in place this year.
The legislation will require 10% of social homes and 10% of affordable homes in housing developments in every local authority area.
There are also plans for a cost rental scheme.
Mr O’Brien said the bill was unanimously agreed by Cabinet and the next step will be to publish it in its entirety and to quickly implement it.
He described it as the most comprehensive piece of legislation on affordable housing in the history of the State.
He said the proposals will give hope to people who currently cannot buy a home.
The Social Democrats housing spokesperson told RTÉ’s Drivetime that the main plank of the Affordable Housing Bill is the shared equity scheme, which he described as a “mistake”.
Cian O’Callaghan said the measure was lobbied for by the Construction Industry Federation and other developers.
He said that in the context of increased costs for building supplies and labour as many construction workers have gone abroad, “introducing the shared equity scheme, which we know will increase prices further is a major mistake”.
Mr O’Callaghan said the Government should be heeding warnings from the Central Bank and the Economic and Social Research Institute on this, as when there is a lot of demand, we do not need measures that increase demand and prices further.
In relation to Minister O’Brien’s announcement of price caps on affordable homes of €400,000-€450,000, Deputy O’Callaghan said if that is the idea of affordability, it is “way off the mark”.
He said houses are being built by Ó Cualann housing for between €160,000-€260,000 for three-bed semi- detached houses, “that’s the sort of affordability that would be within reach for a lot of people rather than these price caps”.
The director general of the Construction Industry Federation said inflation in building materials has the potential to increase house prices by €10,000.
Also speaking on RTÉ’s Drivetime, Tom Parlon said right across Europe and the world, the price of steel, bitumen, cement and timber are all increasing very substantially in price.
He said the shared equity scheme will be a major assistance to thousands of people who are trying to get on the mortgage ladder.
Mr Parlon said that builders would say they have built about 4,000 houses during the first quarter of this year and there is a potential to build 12,000-14,000 before the end of the year, bringing the total to 18,000 or 20,000 at a push.
He said he believes there is sufficient flexibility and resilience in the industry that if the demand is there for the houses they will be built and the industry will catch up on the number of houses needed.
He said the construction industry is happy to be back.
Government to oppose Sinn Féin rent motion
The Government will oppose a Sinn Féin private members motion tomorrow which, the party claims, will end the crisis in the private rental sector.
Sinn Féin housing spokesman Eoin Ó Broin asserted that the Government has “failed to properly regulate against unsustainable rent hikes, while failing to deliver affordable rental homes at the scale required.”
He said his party would “implement an emergency, three-year ban on rent increases and legislate for tenancies of indefinite duration…
introduce a refundable tax credit for tenants in the private rented sector to put a month’s rent back in every renters pocket.”
However, the Cabinet agreed that the Government will put forward a counter-motion which will state that it is “committed to tackling high rents and comprehensive protections for tenants are coming.”
Additional reporting Paul Cunningham