Shared Ownership Scheme

Dáil Éireann Debate, Thursday - 16 July 2015

Thursday, 16 July 2015

Questions (713)

Bernard Durkan

Question:

713. Deputy Bernard J. Durkan asked the Minister for the Environment, Community and Local Government the extent to which he and his Department have managed to address the inherited issue of distressed shared ownership mortgages; and if he will make a statement on the matter. [29664/15]

Written answers

Minister for the Environment, Community and Local Government

My Department, with the assistance of the Housing Agency, the Housing Finance Agency and the Local Authority Housing Loans Management Group, has been examining the operation of the Shared Ownership Scheme for existing borrowers. The issues arising with Shared Ownership Schemes require careful consideration and expert financial data analysis. Arising from the findings of the review to date, with effect from 1 July 2015, the Index Linked Shared Ownership Scheme (operational up to end-2002) has been revised with regard to the annual indexation of the rental equity balance and rental payments. These amendments will reduce the monthly cost for these borrowers and avoid existing rental equity balances increasing for the remaining term. My Department has issued directions to local authorities outlining the measures and I understand these changes are being applied to individual loan accounts.

In addition, the recent reduction of 0.20% in the Local Authority variable mortgage interest rate will also benefit many Share Ownership borrowers. This new rate cut will bring the variable mortgage interest rate charged to local authority borrowers down to 2.55% with effect from 1 July, saving borrowers around €17 per month on a typical mortgage of €100,000.

My Department, together with the other agencies, will continue to examine the operation of Shared Ownership loans and issues arising for some borrowers with a view to developing further measures that may assist with the affordability of these arrangements.

Local authority borrowers should contact their local authority if they are having difficulty making the repayments on their local authority mortgage or Shared Ownership arrangement. My Department’s latest guidelines for local authorities in dealing with mortgage arrears within the local authority sector, Dealing with Mortgage Arrears – A Guide for Local Authorities (June 2014), are available on my Department’s website at: www.environ.ie/en/Publications/DevelopmentandHousing/Housing/FileDownLoad,30943,en.pdf.