The Gazette 1983

GAZEITE

Correspondence

The Editor

September, 1983

Law Society Gazette,

Blackhall Place,

Dublin 7.

Dear Sir,

There are a number of points in your article on the

Housing Finance Agency in the July / August issue of the

Gazette

which require comment.

Regarding criticism of delays, I would like to confirm

that since the first loan was paid in August 1982 there has

been no delay in the disbursement of funds from the

Agency to local authorities, the requests for funds from

authorities in the majority of cases being met within a few

days of receipt.

Regarding your comments on the inherent risks for

borrowers arising from an interest rate based on inflation

I would like to make the following points:

The example quoted in your article was published

by the Agency at a time when annual inflation was

running at over 15%. Since then there has been a

considerable fall in inflation and the annual rate up

to May, 1983, was 9.2%. This resulted in an interest

rate on H.F.A. loans in the first year of charge of

12.45% (9.2% plus 3.25%) which compared

favourably with the rates on local authority and

buildin~

society loans at 12.5% and 13%,

respectively. Because of the increase in the cost of

funds to the Agency the amount to be added to the

rate of inflation to determine the interest rate on

Agency loans issued on or after 1st July, 1983, will

be 4.25%. A table showing an example of a

repayment pattern on a loan of £20,000 is included

on the handout recently issued by the Agency.

2. You will note that the handout mentions that if a

borrower from the HFA opts to make repayments

of 18% of his previous year's income (the minimum

repayment payable by a borrower receiving a loan

of three times his previous year's income) he would

not benefit from appreciation in the value of the

house in the same way as a borrower with a conven–

tional mortgage if he decides to re-sell. However, it

is open to the borrower to pay more than the

minimum required up to the amount he would pay

on an annuity basis and have his capital debt

reduced in line with borrowers who have building

society loans. On this basis he may change house on

approximately the same terms as the borrower with

a loan from a building society and the benefit he

derives will depend on the housing market at the

time. HFA borrowers who can afford to do this but

who decide to make

th~

minimum payment

required only have the benefit of money for other

purposes in the early years of the mortgage. While

the ultimate decision on the amount he will repay

rests with the borrower it is suggested tht he should

be advised to give very serious consideration to the

advantages of paying more than the minimum

where he can afford to do so.

<?ne should note that the Agency scheme is geared

mamly to help those people who might not otherwise be

292

DECEMBER 1983

able .to do so to provide their own homes. There is no

requlr.ement that

~he

bO.rrower should have money on

depOSit for a definate penod before he is considered for a

loan and

~orrow.ers

who cannot undertake the burden of

comparatively high repayments in the early years of a

mortgage can opt for income related repayments. The

benefits of the scheme to those who, without it, might

ha~e

to look to the private rented sector for accommo–

dation ar.e considerable; as. for other applicants, the

scheme gives .them the chOice of providing their own

house or lookmg to the local authority for re-housing.

Yours faithfully,

John Carroll,

Managing Director.

Housi~g

Finance Agency,

Phoemx House,

27 Conyngham Road,

Dublin 8.

EDITORIAL NOTE: There is perhaps an air ofunrealism

about the suggestion that it is open to the Borrower to pay

more than the minimum required The HFA scheme

intended to cover those whose incomes are not sufficiently

high to enable them to qualify for Building Society

Mortgages.

The Editor,

Law Society Gazette,

Blackhall Place,

Dublin 7.

Dear Sir,

15th November, 1983

I refer to the recommendation of Joint Committee of

Building Societies/Law Society (issued as a supplement

to the

Gazette

of the Incorporated Law Society of Ireland.

September 1983, Vol. 77. No.7) wherein the Joint

Committee opined that there is no necessity to have a

deed made in pursuance of Section 14 of the F.H.P. Act,

1976, adjudged duly stamped.

This direction struck me as curious, in that in past

experience in cases where the "Section 14 exemption" was

invoked, when a deed was lodged for adjudication the

Revenue Commissioners reserved their right to judge

each case on its merits. For example, ifa large area ofland

was involved, then the Revenue would allow an

exemption from stamp duty for the family home and the

land "reasonably appurtenant thereto"; stamp duty

would then be levied on the remaining land at half the

normal rate (not

Valorem.as

the parties are husband

and wife). The Adjudication Office employed two criteria

in coming to their decision, i.e., (I) the value of the land

and (2) the amount of land involved.

I have raised the point with the Adjudication Office and

it has been confirmed that the position has in no way

altered so far as they are concerned.

Accordingly, the direction of the Joint Committee may

be slightly misleading in that practitioners may construe

the direction as an

imprimatur

to register all deeds

without adjudication (regardless of the amount of land

involved) made in pursuance of Section 14 where the

appropriate certificate is contained in the deed.

Yours faithfully,

Alan Synnot, B.C.L.,

35 Landscape Crescent,

Churchtown,

Dublin 14.