The Gazette 1983

GAZEITE

DECEMBER 1983

Correspondence

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 is intended to cover those whose incomes are not sufficiently high to enable them to qualify for Building Society Mortgages. 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 Ad 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. The Editor, Law Society Gazette, Blackhall Place, Dublin 7. Dear Sir, 15th November, 1983

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: I. 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.