Dáil Éireann díospóireacht -
Thursday, 6 Apr 1995

Vol. 451 No. 7

Adjournment Debate. - Home Shared Ownership Scheme.

Mr. N. Ahern

I thank the Ceann Comhairle for allowing me to raise this important matter on the Adjournment. Dublin Corporation has granted more than 600 shared ownership loans since the commencement of the scheme. However, given the high house prices in Dublin the scheme is only of benefit to people in a very narrow income range. Access to the scheme depends on the initial equity stake, income and the availability of low priced dwellings in an area.

The scheme is operated on the basis of a uniform set of rules. However, the supply of reasonably priced houses is not uniform throughout the country and low income households in areas such as Dublin where house prices are above average have limited access to the scheme. A shared ownership purchaser in Dublin who can afford to buy a house up to £35,000 has a much more restricted choice than a purchaser in similar circumstances in areas where house prices are cheaper. In addition, purchasers are now in direct competition with local authorities such as Dublin Corporation which has set a target of 200 house purchases this year.

Some months ago the management of Dublin Corporation submitted proposals to the Department which would make the shared ownership scheme more accessible to households in Dublin and, in particular, to low income households, thereby reducing the pressure on scarce local authority accommodation. The proposals included an incidence in the rental subsidy which is still at the 1991 rate and the introduction of an additional subsidy to make shared ownership a realistic alternative to the provision of low cost accommodation by local authorities. It was suggested that the initial equity purchase requirement should be reduced and that instead of a 50:50 scheme one could have a 65:35 or 70:30 scheme in Dublin. Approximately 2 per cent of applicants in Dublin have bought new houses and it was suggested that if the £3,000 grant for first time buyers was applied to used houses it would increase people's prospects of buying a house.

I am interested in hearing the Minister's views on these proposals which have been with the Department for some months. The Department has put pressure on local authorities to introduce proper estate management. The best way of achieving this is if people have a financial interest, however small, in their own homes. Yesterday during the debate on the Consumer Credit Bill I was concerned at the lukewarm response of the Minister of State at the Department of Enterprise and Employment, Deputy Rabbitte, to an amendment dealing with the shared ownership scheme. He was supported in his remarks by his party's inseparable back bench twins, Deputies Eric Byrne and Kathleen Lynch. Dublin Corporation is very much in favour of the scheme and I hope the Minister has given favourable consideration to its proposals.

Ms McManus

The target in the Programme for Government to provide 7,000 houses is the highest for many years and included is an element for shared ownership. The Government is committed to promoting the shared ownership scheme.

I thank the Deputy for raising this matter and giving me the opportunity of outlining the present position in relation to the review of the shared ownership system.

The system was introduced to facilitate households aspiring to home ownership but who could not afford to purchase in one step in the conventional manner. Those who use the system enjoy the benefits of ownership, but have more affordable outgoings than under a conventional mortgage. They do not need a large deposit and are exempt from stamp duty. By the end of 1994, local authorities had completed 2,871 shared ownership transactions and a further 1,106 cases had been approved in principle.

Shared ownership, in common with the other schemes introduced under A Plan for Social Housing in 1991, has been under review in the Department. The review is now practically completed. Its outcome and the resulting alterations to the schemes will be announced, as a single package, in a new policy document on social housing which will be published within the next month.

The local authorities and the voluntary sector were widely consulted in the review process. Dublin Corporation responded to the original request for views. Account has also been taken of the report of the Lord Mayor's Commission on Housing and Dublin Corporation's report entitled A Review of the Operation of Shared Ownership by Dublin Corporation.

The Lord Mayor's Commission, who published its report in March 1993 stated: "Shared ownership undoubtedly represents a significant development in the mortgage and housing markets in Ireland and an important innovation in public policy in the area of housing provision for those on low incomes." It went on to express some disappointment at the level of take-up in the Dublin Corporation area up to that time.

The cost of housing in Dublin, relative to other areas, was identified as a factor militating against the success of shared ownership in the Dublin area, both in the Commission's report and the Dublin Corporation review. This recommended increased rent subsidy to be payable to low income householders, not only on the basis of inflation since the introduction of the system but also to make shared ownership a more attractive proposition generally; reduction in the minimum equity to be acquired by shared owners from its present level of 50 per cent to 35 per cent; payment of £3,000 new house grant to all shared owners, even if purchasing a second-hand house; a provision allowing local authorities to take back some of the equity under purchase in cases of extreme hardship; increased flexibility in the purchase by the shared owner of the rented equity, and an increase in the current loan maximum of £25,000.

My Department has already advised Dublin Corporation that the ordinary loan limit of £25,000 does not apply to shared ownership. The revised terms and conditions for the shared ownership system will take account of the corporation's other recommendations. My general aim is to improve access to shared ownership, but to avoid enticing into the system persons who could not realistically achieve home ownership.

Since the time of the reports to which I referred, there has been reasonable progress under the shared ownership system in Dublin. In 1994, Dublin Corporation contributed some 28 per cent of all completed shared ownership transactions. The corporation completed 354 transactions in 1994, compared to 206 in 1993.

The changes to be announced will further increase the potential of shared ownership to meet certain housing needs in Dublin and, indeed, also in the rest of the country.