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Local Authority Home Loan Overview

This is a Government backed mortgage provided to first time buyers and Fresh Start applicants through local authorities. The Local Authority Home Loan scheme is for the purchase of new or second-hand residential properties and for self-builds. It also includes the purchase of homes through State schemes such as the Tenant Purchase Scheme and Affordable Housing Schemes, with the exception of the First Home Scheme.

A "Fresh Start" principle also applies to the Local Authority Home Loans scheme. This means that applicants who are divorced, legally separated/separated or the relationship has ended and have no financial interest in the family home are eligible to apply under this scheme¹.

People who have undergone personal insolvency/bankruptcy proceedings will also be eligible to apply for the Local Authority Home Loans Scheme ².

The credit policy complies with appropriate legislation including:


¹ For the purposes of this Scheme, a marriage is deemed to have ended when it is the subject of a decree of judicial separation, divorce or decree of dissolution or nullity, or a civil partnership has ended.

² A person who has exited Insolvency/bankruptcy proceedings and had previously purchased a home but has been divested of these through these proceedings may still be eligible to apply for a Local Authority Home Loan.


Local Authority Home Loan Credit Committee

Each Local Authority providing Local Authority Home Loans will have in place a credit committee.

Applications for a Local Authority Home Loan will be assessed by the credit committee for eligibility and creditworthiness. Once a decision has been made, you will receive a letter from your local authority. Approved applications will receive an Approval in Principle letter. If your application is declined, the reason(s) why will be included in your declined letter.

Appeals Process

Each Local Authority will have an Appeals Procedure to allow a dissatisfied applicant(s) to appeal a loan application decision of the credit committee's.

An Appeals Panel will consider appeals only where the applicant can prove their application adheres to the eligibility criteria of the Local Authority Home Loan scheme.

Complaints Process

If you (the applicant(s)) have exhausted the Appeals Process and remain unhappy with the local authority decision, you can make a formal complaint to the Local Authority Complaints department.

If your complaint is not resolved satisfactorily, you can refer your complaint to the office of Ombudsman by:


Local Authority Home Loan Key Features

First Time Buyer Status

In order to qualify for the Local Authority Home Loan scheme, each applicant must be a first-time buyer (applicants cannot have previously, either individually or jointly, purchased or built on their own behalf, a residential property either in Ireland or elsewhere) or be otherwise eligible through the Fresh Start principle.

As an applicant you are required to declare that you are a first time buyer(s). You must provide your Personal Public Service Number (PPSN) and consent to authorise the Local Authority to conduct such checks as are necessary to confirm this, such as conducting a Local Property Tax check and Central Credit Register check.

Joint Applicant Status

For the purposes of a joint application, all applicants must qualify as first-time buyers except where an applicant is eligible under the Fresh Start principle. Joint applicants can be two or more persons who apply for a housing loan together.

Applicant Eligibility

To be eligible for a Local Authority Home Loan, you must be:

The requirement that a single or sole earner must have at least two years continuous employment and the second applicant must have at least one year of continuous employment is relaxed for periods where an applicant was unemployed as a direct result of the COVID-19 situation. Generally, affected applicants who were in receipt of the Pandemic Unemployment Payment (PUP) up to 5 April 2022 are not considered to have had a break in employment in the two preceding years if the following conditions are met:

Contract Employment Income

Contract income will be considered in repayment capacity provided:

Further evidence of contract employment may be sought by the Local Authority.

Credit Check

Mortgage Protection Insurance

Mortgage Protection Insurance is a form of insurance which pays off the outstanding balance on your mortgage should you die before the mortgage is fully repaid. The Local Authority MPI scheme is a group scheme. It is obligatory for all borrowers who meet the eligibility criteria to join the scheme.

Full terms and conditions of the scheme are available from your local authority.


Fresh Start Principle

A Fresh Start principle applies for applications to State affordable housing and loan schemes.

This means that the following categories of persons are eligible to apply for the Local Authority Home Loan;

Termination of Relationships - Separation/Divorce/Dissolution of Civil Partnership/Civil Annulment

In recognition of instances where an individual has undergone a separation/legal separation/divorce or otherwise and has relinquished their rights to the family home property, an exemption to the First Time Buyer eligibility criteria can be applied under the Fresh Start Principle.

In cases such as these, the applicant must meet all the following criteria (This will need to be confirmed by way of a solicitor's letter before drawdown of any loan):

Insolvency/Bankruptcy

A person who has exited insolvency/bankruptcy proceedings and had previously purchased a dwelling/dwellings may still be eligible for Local Authority Home Loan if as a result of insolvency or bankruptcy they had to sell or had been divested of their home.

They must have exited insolvency/bankruptcy at least 12 months previously to be eligible to apply. Additionally, they must have a clean credit record for a minimum duration of no less than 12 months prior to their LAHL application. 

Where any of the persons making an application previously purchased or built a dwelling/dwellings  that person demonstrates, that they have sold, or have been divested of, that dwelling/dwellings as part of a personal insolvency or bankruptcy arrangement or proceedings or other legal process consequent upon insolvency, then the previous purchase or building of the dwelling/dwellings concerned shall not render the applicant(s) ineligible for a Local Authority Home Loan.


Property Eligibility

The property must:

Market Value

The maximum market value of the property to be purchased is:

The market value of the property can be above these limits if the property is available through the Local Authority Affordable Purchase Scheme.

The Local Authority Affordable Purchase Scheme is for first-time buyers purchasing newly built properties, whose mortgage and deposit will not cover the market value of the home. Applicants can apply for a mortgage under the Local Authority Home Loan scheme as long as the purchase price (the difference between the market value of the property and the purchase price paid by the applicant) is within the Local Authority Home Loan scheme limits for market value as set out above.


Loans Post-Drawdown

Adding/Removing Borrowers

Removing a borrower

A borrower can be removed from a mortgage (for example due to relationship breakdown), however as this may have implications for the security and repayment of loan it can only be done with the consent of the Local Authority.

Adding a borrower

In certain circumstances (borrower enters into a new relationship), a borrower may seek to add a new borrower to the mortgage. This may be facilitated by your local authority but subsequent addition of borrowers which are an attempt to circumvent Local Authority Home Loan scheme rules will not be facilitated.


Good Financial Standing

Applicant(s) must:

Deposit amount

Please note: Personal savings must be accumulated over a period of at least 12 months before you make your application. You must provide certified or original bank or similar statements (post office, credit union, etc.) clearly showing a credible and consistent record of savings. Unidentified lump sum lodgements made to a savings account within the 12-month period will not be considered when computing the deposit.

Maximum Loan amount and term

Interest Rate

A Local Authority Home Loan offers two fixed interest rates:

A fixed interest rate mortgage is a loan where the interest rate stays the same throughout an agreed period. The Local Authority Home Loan interest rate is fixed for the full term of the mortgage. This means that your loan repayments are the same every month for the lifetime of the mortgage. Interest rates are subject to change at any time before the drawdown of a Local Authority Home Loan. The interest rate is determined by the applicable rate on the date of drawdown and is fixed for the full term.

Borrowing Record

Where the applicant(s) have a previous or existing borrowing record, this will be considered as part of the application for the Local Authority Home Loan.


Income

Only income originating in the Republic of Ireland or Northern Ireland by applicants with a right to reside and work in the State will be reckonable in calculating borrowing and repayment capacities.

Eligibility for the scheme is dependent on an applicant’s gross income being within the relevant income ceiling. As set out below, gross income is deemed as being the income (including relevant social welfare payments) reported for the payment of tax in the previous tax year.

The income details provided by the applicant(s) must be supported by the documentation set out in Appendix 1 (for applicants who are in PAYE employment, contract employment, self-employed or a company director).

Contract Employment Income

Contract income will be considered in repayment capacity provided:

Further evidence of contract employment may be sought by the Local Authority.

Treatment of Additional/Temporary Payments for Repayment Capacity

There are limitations on the amount of payments above basic earned income (such as overtime, bonus, subsistence, commission, allowances etc.) that can be allowed for repayment capacity.

State benefit payments

Generally, social welfare payments would not be considered as part of repayment capacity. However, certain long-term State benefit payments may be considered as repayment income only where the main income source is of an earned nature (i.e. more than 50% of the income that forms the full Home Loan application is from a source other than State benefit payments).

Long-term State benefit payments considered are:

In calculating borrowing and repayment capacity, 100% of the above long-term State benefit payments will be reckonable.

The long-term nature of the payment must be confirmed by the Department of Social Protection or other relevant Government Department.

Maintenance

You must include maintenance payments where you are responsible for paying maintenance to a third party, and where there is a maintenance order in place, a copy of the maintenance order will be required. Similiarly, where you receive maintenance payments, which are the subject of a maintenance order, these payments must be evidenced. If the maintenance is not paid directly to the applicant's bank account, a copy of the maintenance order must be provided.

Where either party to a mortgage application is separated or divorced, the following details should be supplied with your application;


Valuation Reports for Purchasing a Residential Property

Where the property is sourced on the open market, each application must be supported by a valuation report, as set out at Appendix 3, carried out by an approved independent or Local Authority Valuer. A valuation report is only required when applicants have gone Sale Agreed.

Where the property is being purchased under the tenant purchase scheme, the valuation will be carried out by a Valuer on behalf of the Local Authority.

Under the Local Authority Home Loan, the property must have a prevailing market value, on day of completion, that does not exceed the values as specified in the Housing (Home Loans) Scheme.

A Valuation Report carried out by an approved independent or Local Authority Valuer will be provided before a Letter of Loan Offer is issued.

The Valuation Report should be completed within 6 months on a Valuation Report such as the indicative template form available here.

The Valuation Report:

Valuation/survey fees are payable by the applicant(s) to the firm of Valuers who undertake the valuation.


Self-Build Criteria

Applications for a Local Authority Home Loan for the purposes of funding a self-build property will only be considered in circumstances where the security property in question is a new construction, i.e. properties that are part-built or otherwise commenced at the time of making a Local Authority Home Loan application will not be eligible for consideration.

Full compliance with the Building Control statutory certification is a requirement of the Local Authority Home Loan, the facility to opt out of statutory certification (allowed for in Building Control (Amendment) (No. 2) Regulations 2015 (SI 365 of 2015)) is not available to borrowers.

An application for a Local Authority Home Loan to fund a self-build property will be considered in two stages, as follows:

  1. Application for funding under Local Authority Home Loan
  2. Satisfaction of Local Authority requirements for self-build property

Loan to Value (LTV) for Self Builds

Full Planning Permission Owned Site

Where an applicant(s) is building their own home on a pre-owned site with planning permission, the loan will not exceed;

Full Planning Permission on Site to Purchase

Where an applicant(s) is building their own home on a site with planning permission to be purchased, the loan will not exceed;

Self Builds under Contract

Where a self-build is to be completed under contract, it must meet the following criteria:

Self Builds by Direct Labour

Where a Local Authority decides, at its discretion, to provide loans for self-builds by direct labour, it must meet the following criteria: 

          A. That he supervised the opening and laying of the foundations and that they  are suitable for the Secured Property and the ground conditions; 

         B. That he supervised the construction of the Secured Property through all  stages;  

        C. That the Secured Property has been completed in accordance with good  building practice; and  

        D. That there is no further work outstanding.  

Site

The applicant(s) solicitor must confirm the following:

Valuation Reports for Self Builds

Under the Local Authority Home Loan, the property must have a prevailing market value, on day of completion, that does not exceed the values as specified in the Housing (Home Loans) Scheme.

A Valuation Report carried out by an approved independent or Local Authority Valuer will be provided after planning permission is approved and before a Letter of Loan Offer is issued. The Valuation Report will be based on the property being completed to the specifications outlined in the most recent planning permission granted by the Local Authority and will be provided prior to a Letter of Loan Offer being issued for a self-build.

The valuation should be completed on a Valuation Report such as the indicative template form set out in the Appendix 3.

The Valuation Report must:

Valuation/survey fees are payable by the borrower(s) to the firm of Valuers who undertake the valuation.

Compliance with Planning & Building Regulations

Certificates of compliance with planning and building regulations are required for all properties prior to drawdown, and must be provided by suitably qualified insured architects, engineers or building surveyors.

The forms of compliance shall be those approved by the Royal Institute of the Architects of Ireland (R.I.A.I.), Engineers Ireland (E.I) or the Society of Chartered Surveyors Ireland (S.C.S.I).

Self Build General Conditions - Compliance with Building Control Acts

Dwellings should be designed and constructed in accordance with the Building Regulations.

The owner must assign competent persons to design, build, inspect and certify the building works who, in turn, must account for their role through the lodgement of compliance documentation, inspection plans and statutory certificates.

In summary;

The construction supervisor must hold Professional Indemnity insurance cover of at least €1m on each and every claim basis with no aggregate cap. A copy of the certificate of Professional Indemnity must be provided prior to loan approval.

Self Build Supporting Documentation

The following documents must be provided with the loan application:

Non-standard certificates or standard certificates which have been altered by the supervising person are not acceptable.


¹ For the avoidance of doubt, the building control regulations do not prevent an owner from taking on the role of the builder for the purposes of these regulations, provided they are competent to do so.


Information Centre Appendices

Appendix 1:
Supporting Documentation Required

The following list details the standard documentation required to complete a Local Authority Home Loan (LAHL) application. Further documentation may be requested at the discretion of the Local Authority as part of the Local Authority Home Loan application process at any time up to the drawdown of a loan.

Proof of Identity, address and Personal Public Service Number (PPSN)

All parties to LAHL applications will need to provide proof of name, their address and proof of PPSN or Tax Registration Number (TRN). Local Authorities are required to collect and verify your Personal Public Service Number (PPSN) or Tax Reference Number (TRN). This is required by the Central Bank of Ireland's Central Credit Register for Customer Identification.

Proof of Name

Original of:

Proof of Address

Original of:

Proof of PPSN

Original of:

Financial Documentation

Originals or where E-statements printed from online banking certified by regulated financial provider:

Note: Self-employed applicants must submit business and personal account statements.

Renting
Local Authority/ Approved Housing Bodies (AHB) Tenants

Most recent 12 months evidence of rent payments. Tenants of a local authority or tenants under the RAS/HAP Scheme must submit a letter from the Rent Assessment Section confirming that their rent assessment is up to date and the account is clear for 6 months before applying for a LAHL.

Private Renting

If an applicant is in private rental, and there is no regular standing order or direct debit evidencing 12 months rent being paid out of their current account, a copy of the lease or rental agreement will be required.

Proof of Insufficient Loan Offers

Applicant must provide proof as set out below.

The value of the mortgage the applicant(s) were refused from two regulated financial providers must be equal to or less than the Local Authority Home Loan amount sought. A regulated financial provider is a company, or mortgage broker on behalf of a mortgage lender, that is regulated by the Central Bank of Ireland and is permitted by the Central Bank of Ireland to provide monies to borrowers who wish to purchase a property. Acceptable evidence of this are:

In all instances, the evidence must be dated within 12 months of submitting a Local Authority Home Loan application. Original copies of all documentation are required as part of the application process.

10% deposit

The 10% deposit required for purchasing a residential property can be made up of:

Evidence of Savings/Contribution Required

Income Confirmation

Employed (PAYE)
Employed (PAYE) Contract
Self Employed
Company Directors
If in receipt of Department of Social Protection benefits

Completed Appendix 2 from Local Authority Home Loan application form. Benefit payments received in the previous 12 months must be verified by the Department of Social Protection

Maintenance Payments

Appendix 2:
Reasons why an application may receive a Recommendation to Decline

Unsatisfactory Credit History

Details outlined in the applicant's Central Credit Register enquiry or registered judgement check indicates that the applicant(s) has a related issue.

Net Income Ratio Outside of Policy

The proposed monthly repayment as a percentage of the applicant's net monthly income exceeds the percentage as permitted in the Local Authority Home Loan Credit Policy.

Repayment Capacity Not Demonstrated/Evident

Applicant's capacity to service the proposed monthly loan and MPI repayments is not proven from documentation provided.

Unsatisfactory Savings Record / Source of Financial Contribution

Applicants have insufficient savings to cover the 3% cash deposit requirement, or their savings record is not credible and consistent.

Sufficiently Committed

Applicant's current financial commitments i.e. monthly loan repayments, credit card commitments, etc. do not leave sufficient funds to cover the proposed monthly loan and MPI repayments.

Income Sustainability Not Evident

Applicant's employment/income sustainability is not proven from documentation provided.

Unsatisfactory Financial Management

Applicant's financial information i.e. banks current account statements, credit union statements, rent statement or credit card statements indicate unsatisfactory operation of these accounts by way of arrears, unpaid standing orders/direct debits, bank referral fees and missed credit card payments.


Appendix 3:
Valuation Report

Download Indicative Valuation Report Template

Explanatory Notes For the Completion of the Valuation Report Form

All Valuation Reports should be completed in full with no part left blank and no question left unanswered. All Valuation Reports should be signed and dated with the Valuer's stamp imprinted thereon. No amended valuation amounts, either by overwriting or by use of correction fluid, will be accepted. All Valuation Reports should be accompanied by a coloured photograph giving clear and unobstructed views of the property over which it is proposed that security be taken (the "Property") with the address of the Property and the date duly imprinted thereon.

Location

State if the location is urban or rural. If rural give the distance from nearest town/village, civic amenities, transport links etc.

Give details of any other information which may affect future saleability

Are there any unusual aspects regarding the Property and its environment e.g. rights-of-way, bad approach to the Property, adverse development plans, noise, smells, pylons, TC masts, flooding, vandalism or any similar factors that would negatively impact on future saleability.

Is there any visual evidence of subsidence, settlement, land slip or ground heave?

If there is evidence of damage arising from the above or through shoddy workmanship details are to be given. Valuer should also take into consideration obvious defects in neighbouring properties.

Do you recommend a specialist report?

If the Valuer is unable to determine the cause of a defect which could have relevance to the future condition/resale of the Property then he should suggest a specialist report to comment upon the particular defect(s).

Such reports should only be requested where deemed necessary and should not become routine.

Are there any Rights of Way, easements or Way Leaves required/provided by the subject property?

If there is evidence of any of the above on or over the Property please give details and advise on the likely impact on resale.

If the Property forms part of a development, please advise

All parts of this question must be answered to enable the Local Authority to form an overall view of the status of the development.