The Government’s housing policy statement published in June 2011 marked a significant departure for housing in Ireland, including a shift to a tenure neutral high level objective, and a clear commitment to restoring balance to the housing sector generally through a lesser reliance on home ownership. The statement also announced the standing down of all affordable housing schemes on the basis that these had been symptoms of, rather than solutions to, an overheated property market. The policy statement reaffirms the State’s commitment to supporting access to home ownership for lower to middle income households and the current range of paths to home ownership will remain in place in that regard.
There are two types of house purchase loan available from local authorities: standard annuity loans targeted at lower income first time buyers and those under the Home Choice Loan scheme which are available to qualifying middle income first time buyers affected by the “credit crunch”. The terms and conditions governing the operation, including eligibility terms, of annuity mortgages and the Home Choice Loan are set out under various Regulations such as the Housing (Local Authority Loans) Regulations 2009, the Housing (Home Choice Loan) Regulations 2009, and most recently in the Housing (Local Authority Loans) Regulations 2012. These are available on my Department’s website: http://www.environ.ie/en/Legislation/DevelopmentandHousing/Housing.
It is not the intention of the Home Choice Loan scheme – or of any other Government intervention in the housing sector – to incentivise people into the market. It is designed only to facilitate credit worthy households who have been affected by conditions in the mortgage market. As such, the scheme is a temporary one which will be withdrawn once conditions in credit markets return to normal patterns. Recent data published by the Central Bank would indicate that that point has not yet been reached. To ensure effective targeting of limited resources, local authority loan finance continues to be available to first time buyers only. The option currently available for non-first time local authority homeowners wishing to relocate is to seek home loan facilities from one of the commercial lending institutions.
The Government’s 2011 Housing Policy Statement also announced the standing down of all affordable housing schemes, including the shared ownership scheme, in the context of a full review of Part V of the Planning and Development Acts 2000-2013. Details regarding the review are available on my Department’s website:
http://www.environ.ie/en/DevelopmentHousing/Housing/PublicConsultations. Dublin City Council did not make a submission as part of this public consultation.
In 2013, I asked the Housing Agency to conduct a stand-alone review of the shared ownership scheme, including identification of the main difficulties and recommendations for mitigating measures. Dublin City Council has contributed to this review and its input has been given careful consideration. While I have received an initial draft of the review from the Agency a number of issues have been identified that need further detailed financial analysis. For example, full information on the status of each local authority’s loan book is required in order to accurately determine the implications of any possible solutions to shared ownership issues for local authority debt management generally. This substantial data collection project involving my Department, the Local Government Management Agency and the local authorities themselves is under way. It will be a number of months before sufficient data has been collected in order to complete the requisite analysis to enable the completion of the review.
Pending full conclusion of this review, my Department issued a circular letter to local authorities setting out some of the options and interim actions that might be explored to alleviate the difficulties of those in shared ownership distress such as allowing use of the Mortgage Arrears Resolution Process and room rental for Shared Ownership mortgage holders. It is accepted that these proposals are not a complete solution to the issues that arise for such mortgage holders but are intended as an interim measure pending outcome of the review.
I fully recognise that shared ownership home owners, amongst others, have been affected by issues such as unemployment and possible negative equity. In such cases, borrowers should actively engage with their lenders, whether a commercial financial institution or a local authority, to seek to avail of one of the options available to provide sustainable solutions to distressed mortgages. Any future changes to legislation governing affordable housing schemes, including the shared ownership scheme will be made in the context of both reviews.
The mortgage arrears resolution process, already in place in respect of commercial mortgages, is now being implemented across all local authorities. In cases of acute mortgage distress, homeowners also have the option of seeking to avail of the legal process now in place to deal with personal insolvency. On foot of the recommendations of the Keane Report on mortgage arrears, the Government launched a Mortgage to Rent scheme on a pilot basis in February 2012. This scheme was extended nationally in June 2012, targeting those low income families whose mortgage situation is unsustainable and where there is little or no prospect of a significant change in circumstances in the foreseeable future. The scheme ensures that the family remains in their home, while ownership is transferred to an approved housing body and the family becomes a tenant of the approved housing body. Eligibility requirements are in line with other forms of social housing support. The scheme for local authority borrowers in arrears, which was piloted in two local authority areas, Westmeath County Council and Dublin City Council, has now been rolled out nationally.
