The Minister for Housing has downplayed suggestions that the shared equity loan scheme contained in the new affordable housing bill could have an inflationary effect on the market.
Darragh O'Brien will bring the Affordable Housing Bill to Cabinet today, with the intention that it will be enacted this summer.
The legislation will provide for the direct building of affordable homes by the state and it will also require all housing estates to have 10% social and 10% affordable homes.
The bill will bring in a national scheme on the provision of affordable homes on state-owned land.
It will also include a shared-equity arrangement to offer "choice" to first-time buyers in particular whereby the state will take a small piece of ownership, a maximum of 20%, in the home.
The cost-rental model included in the bill will also allow people to attain state-backed rents at a minimum of 25% below market rents.
This scheme will begin this year in which 400 tenancies across the country will be targeted.
Speaking to Newstalk Breakfast, Minister O'Brien described the legislation as "the most comprehensive affordable housing bill that's ever been brought to Cabinet".
He said he also intends to bring forward provisions to extend Part V, which currently provides that of any new estate which is built, 10% of those homes are flagged for social housing.
The Minister wants to ensure this continues and that there is an option of extending it to 20%.
"The additional 10% will be for affordable housing, we would allow equivalent value and I think we need to do that," he said.
"I don't want a situation where we've seen apartments for €500,000 each when the council has to spend €5m on ten apartments so we need to allow some degree of flexibility.
He added that the measures he is bringing forward today are all focused on the supply of housing.
"We need to increase supply but we need to target the supports for those who need it most," he said.
"There are price caps in it at a regional basis as well and it will simply help people bridge that affordability gap that's there.
"The people I have spoken to who are caught in that affordability trap are anxious that this happens and I think we need to focus on that.
"That's why we're doing it, I believe in home-ownership, I believe that it's aspirational for people to have and I think we should support it."
Today I’ll bring the Affordable Housing Bill 2021 to Cabinet.
✅ Direct state built affordable homes
✅ First ever national cost rental scheme
✅ New shared equity scheme
✅ Extension of Part V to a set 20% in every Local Authority area pic.twitter.com/xXyHzDPHN6
— Darragh O'Brien (@DarraghOBrienTD) May 4, 2021
It comes as concerns have been raised by the Central Bank and other groups that the shared equity loan scheme could lead to inflation within the housing market.
Minister O'Brien said such suggestions have been over-estimated, but added that there would be a review mechanism within this rule.
"Let's remember the size of it first, it's €75m in a mortgage market of €11bn, so I think the idea of an inflationary effect has maybe been overplayed somewhat," he said.
"But having said that, it will be carefully reviewed and built into it is a 12-month review as well to make sure that if we need to calibrate it somewhat we will.
"Anyone who participates in this will need to have an open book approach as well, a fair value approach is built into it."
He added: "So I actually think this is a mechanism to deliver affordable homes quicker because there is an urgency around this, we're not going to solve the housing crisis doing the same things that we've done over the last ten years.
"These measures that I've brought forward in this bill are different, some of them are radical, but we need a radical approach but an approach that's actually going to work and is realisable, not just throwaway remarks on it, we need real action and people want to see that and this will do it."