The Government has recently announced the availability of a Local Authority Purchase and Renovation Loan (LAPR).
The loan, which is an expansion of the Local Authority Home Loan, will support both the purchase and renovation of homes which are eligible under the existing Vacant Property Refurbishment Grant.
The Vacant Property Refurbishment Grant has been incredibly popular to date with over 8,100 applications received under the scheme so far. Now, with the LAPR, a first time buyer who wishes to turn a vacant or derelict property into a new home can receive a loan to fund both purchase and renovation works.
Eligibility for the new support is subject to the applicant meeting the existing local authority mortgage lending eligibility criteria and the project meeting scheme lending criteria. The introduction of the LAPR significantly expands the types and numbers of homes eligible under current local authority mortgage lending rules. Previously, only homes which were habitable were eligible for the Local Authority Home Loan and the loan was only available for the purchase of the property, not renovation.
The loan, which will be available in the coming weeks, reinforces the government’s commitment to bring homes back into use – a key objective of Housing for All – while also providing another funding pathway for individuals to realise their goal of homeownership.
North Cork Fine Gael Councillor John Paul O’Shea said:
“The extension of local authority mortgage lending to the purchase and renovation to all homes eligible for the Vacant Property Refurbishment Grant will help people who are struggling to complete the purchase and renovation of a vacant or derelict property and will give them the necessary finance to make their project viable. Under Housing for All, we are committed to make the dream of home ownership become a reality for as many as possible. This loan provides another pathway to reaching that destination.”
Further Information:
The changes to current local authority lending policies will now provide support for non-habitable homes to be purchased and for renovations works to be financed. All homes to be supported must be eligible for the Vacant Property Refurbishment Grant.
The Local Authority Purchase and Renovation Loan (LAPR) will be used for these types of homes. This loan is expected to be introduced in the coming weeks. The LAPR will have largely the same eligibility criteria and structure as the existing Local Authority Home Loan (LAHL), but with changes made to facilitate financing renovation projects.
Who could benefit from the Local Authority Purchase and Renovation Loan?
People who wish to purchase and/or renovate a Vacant Property Refurbishment Grant eligible home but cannot get sufficient funding from commercial lenders will now be able to apply to their local authority for a LAPR.
A key feature of the LAPR is that a bridging loan, which is commensurate to the Vacant Property Refurbishment Grant and repayable once the grant is paid out, is an integral part of the loan. This has important benefits for an applicant:
- As the repayment of the bridging loan is based on the Vacant Property Refurbishment Grant, the applicant’s borrowing capacity is increased. They will be able fund works with the LAPR that would not have been available to them from bank funding.
- The viability of the project, which is based on the loan outstanding once the bridging loan is paid back, is improved. The LAPR will take into account the cost of the project, net of the Vacant Property Refurbishment Grant, when determining whether a project is viable or not.
Broadly speaking, there are two main types of likely beneficiaries (all of whom must meet the standard existing local authority mortgage eligibility criteria):
- A person with a project that is viable and whose income is insufficient to source the necessary financing from a bank but is sufficient to demonstrate repayment capacity for their local authority.
- A person whose project is not viable according to bank lending criteria but is viable according to LAPR lending criteria. They would also need sufficient income to demonstrate repayment capacity for their local authority.
What are the eligibility criteria to apply?
The eligibility of applicants is the largely the same as for the Local Authority Home Loan:
- Applicants must be first time buyers or Fresh Start applicants.
- Income limits for borrowers (€70,000 single, €85,000 joint) remain the same.
- Applicants must be eligible for the Vacant Property Refurbishment Grant.
- Applicants must pass the standard creditworthiness assessment under the Local Authority Home Loan, which has requirements around income sustainability, employment and creditworthiness, as well as other personal eligibility requirements.
- Borrower creditworthiness will be assessed as usual. Borrower repayment capacity will be capped as usual at 35% of net disposable income.
- The property must be their intended Principal Private Residence (i.e. it cannot be used for rental properties) and the local authority must have first charge.
However there are some specific amendments to accommodate renovation projects:
- As in the standard Local Authority Home Loan, applicants must be unable to source sufficient financing from commercial lenders to be eligible.
- Applicants may be required to provide additional evidence if they were denied financing for project specific reasons.
- Applicants who have already purchased the home which is the subject of the renovation loan application will be allowed to apply for funding to renovate the home, on the condition that the LAPR has first charge on the home in question.
- Demonstration of project viability is also vitally important. Applicants must be able to satisfactorily demonstrate, with professional analysis as appropriate, that they will able complete the renovations to the required standard and at a reasonable cost. The amount of financing sought must match the scheme lending criteria for the type of renovation proposed.
What type of properties are covered?
- Homes that qualify for a Vacant Property Refurbishment Grant will be potentially eligible for the Local Authority Purchase and Renovation Loan.
- Property must be vacant for more than 2 years and meet all other Vacant Property Refurbishment Grant criteria
- The house will be the applicant’s private principal residence
- The condition of the home will still be a factor in the lending criteria and project assessment.
- The value of the end of the renovation works cannot exceed the existing LAHL price limits and associated LAHL loan limits. For a person seeking to use this loan, the relevant price for the scheme limits is the projected price at the end of the renovation, not the initial purchase price of the home.
The maximum end-of-works market values of the property cannot exceed:
- €360,000 in Dublin, Kildare or Wicklow,
- €330,000 in Cork, Galway, Louth or Meath,
- €300,000 in Clare, Kilkenny, Limerick, Waterford, Westmeath or Wexford
- €275,000 in Carlow, Cavan, Donegal, Kerry, Laois, Leitrim, Longford, Mayo, Monaghan, Offaly, Roscommon, Sligo or Tipperary.
Can you combine this grant with other supports?
Yes. The scheme is designed to work with the Vacant Property Refurbishment Grant so each applicant will be required to avail of this grant.
The applicant is also free to apply for other grants, such as those available from the SEAI. However the bridging loan element will only apply to the Vacant Property Refurbishment Grant.
What does the existing Local Authority Home Loan do?
The Local Authority Home Loan is the current local authority mortgage product. It is a valuable homeownership support for creditworthy borrowers who are unable to get enough finance from the commercial banks to buy a home. It has helped over 3,803 households to achieve homeownership with over €625m in loans drawn down to date. Over €73m was lent by local authorities to 452 borrowers in 2023 alone.
What does the existing Vacant Property Refurbishment Grant do?
The Vacant Property Refurbishment Grant, launched July 2022, is a key measure in returning vacant and derelict properties back into use as homes. Since it was launched, under the Croi Conaithe Towns Fund in July 2022, over 8,100 applications have been made, some 5,000 approved and the number of grants that are being paid out is now steadily increasing as refurbishment works are being completed. 375 have been paid to date and this number is expected to rise very substantially over the coming months.
