I am grateful to you, a Cheann Comhairle, for giving me the opportunity to raise this important matter.
The shared home ownership scheme announced in February last during the much-vaunted press conference by the then former Minister for the Environment advertising his plan for social housing has turned out to be a cruel confidence trick for hundreds of desperate housing applicants.
The shared ownership scheme is essentially a fraud. People who meet the low income requirement of the scheme and who have no chance of public housing — because of the virtual termination of the public housing programme — have been disgracefully misled by the Government in the context of this scheme. They have been invited to apply for accommodation under the terms of the scheme and the public and this House have been invited to believe that the scheme would make a significant contribution to the housing crisis. In fact, at the end of 1991, not a single house in the greater Dublin area has been purchased under the scheme. I am advised that in the State as a whole two such purchases have been effected.
The disgrace is not due to any foot-dragging on the part of local authorities. It is solely due to the inherent defects in the scheme itself. A prospective purchaser under the scheme would need to be either an incurable optimist or a fool. How could any Deputy of any party advise a constituent, driven by a desire to get housing for his or her family, to enter into the following kind of deal?
I take as an example the typical house that would attract a £1,000 deposit under the terms of the scheme for fees and so on and that would require the following mortgage-rental repayments on the 50 per cent purchased, with the obligation to buy out the remaining 50 per cent equity at the end of, or during, the 25 years. In the case of a house costing £41,000, the monthly outgoings in the first year would be as follows if one were buying a 50 per cent share from the start. The cost of a 50 per cent share would be £20,500 funded by a deposit of £1,000 and a mortgage loan of £19,500. Mortgage repayments on the £20,500 loan would be £199 a month. The rental repayments multiplied by 5 per cent would equal £85 a month, making total repayments of £284 per month. For a person on an income necessarily less than £12,000 per annum repayments of £284 monthly represent a very hefty commitment.
However, that is not all. After 25 years the person concerned owns only half of a house and must then buy out the 50 per cent unpurchased equity. In the example I have given above the unfortunate occupier would then be faced with a cost of £52,500 to buy out the remaining unpurchased equity, that is the original outstanding £20,500 at an escalator of 4 per cent per annum over 25 years. Can one imagine a 40 year old person on a low income making hefty repayments over 25 years then being hit with a bill for £52,500 at the age of 65 to buy out the second half of his or her house? Is it any wonder that not a single purchaser has been found in the greater Dublin area?
In those circumstances, how is one to find the unpurchased equity? The Department of the Environment refuse to advise local authorities what will happen if people cannot find the money to buy out the unpurchased equity at the end of the 25 years. No bank would give a loan to a 65 year old person on a small pension. Further, the Minister for the Environment has failed to put in place the legislation necessary to enable local authorities to implement the scheme as a single transaction. As it now stands the scheme — bankrupt, misleading and fraudulent as it is—is inoperable because a local authority must first purchase the house, keep it on the council stocks until the council meet and then sell it on to the purchaser. This practice is unwieldy and unworkable and I ask the Minister to reply tonight to this specific point as well as to indicate whether he intends to address the substantial defects in the scheme itself.
