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Affordable housing scheme axed

AFFORDABLE housing schemes will be scrapped under new plans to encourage people to rent, instead of purchase, their home.

Housing Minister Willie Penrose will today announce a major shift in housing policy.

The State will no longer help middle-income earners to buy a property by subsidising the cost.

Affordable homes were offered to first-time buyers who could not afford to purchase on the open market because prices were too high.

Affordable homes were different from social housing, where a local authority provided a house and the tenant paid rent.

Under the affordable scheme, owners had to live in the property and could earn up to €60,000 a year.

Subsidies of up to 40pc of the asking price were on offer, and in the region of 30,000 affordable homes were sold since the early 1990s.

However, the new housing policy says that "over-stimulation" of the housing market was a key factor in the economic downturn, and that people chose to buy homes "on the basis of investment".

It says that if a household has sufficient income to rent a "high quality home in a vibrant community" but lacks the money to buy an equivalent home, that household has no need of any state assistance.

"The concept of affordable housing reinforces the high value placed on owner-occupation that has been so detrimental to Ireland's society and economy," the policy says.

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The collapse in the housing market has resulted in some 800 affordable units currently lying unsold.

Affordable units were delivered under controversial legislation called Part V, where developers were legally obliged to provide up to 20pc of units in a new development for the scheme or social housing.

This will now be suspended, but the provision for social housing will remain in place.

Local authorities also provided land to developers to build units on the condition that they were sold at a reduced price. This will no longer apply.

The new policy also notes that offering tax relief on mortgage interest encouraged people to buy property because it reduced the cost of servicing the mortgage. This will be abolished by the Government.

The introduction of a property tax next year will also help moderate house prices because it will act as a disincentive to purchasing a home.

Mr Penrose last night said that renting would become a "stable and attractive housing option", and that all homes for rent would be regulated.

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