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Shared Ownership Scheme

Dáil Éireann Debate, Thursday - 3 May 2012

Thursday, 3 May 2012

Ceisteanna (18)

Bernard J. Durkan

Ceist:

10 Deputy Bernard J. Durkan asked the Minister for the Environment, Community and Local Government the degree to which the shared ownership mortgage scheme is continuing to develop with particular reference to the degree to which those who obtain such mortgages are penalised by way of increased value of rental part of the equity thereby resulting in a situation wherein people who were deemed eligible for such loans on the basis of their income have been penalised on the grounds of annual rental increase plus mortgage increase plus notice to the effect that purchase of the remaining equity must be effected within the term of the original loan; if his attention has been drawn to the concern and hardship now being caused in such cases; and if he will make a statement on the matter. [22166/12]

Amharc ar fhreagra

Freagraí scríofa

Under the Shared Ownership scheme the rent charged on the local authority's equity in a shared ownership transaction is to cover the funding costs to the Housing Finance Agency which are based on borrowings at the prevailing interest rates. Any difference between the rent and prevailing interest rate is reflected in the capital outstanding on the property, i.e. if the rent charged in any period is greater than the prevailing mortgage interest due on the local authority's share the purchase price of the outstanding equity will be reduced accordingly.

Local authority mortgage holders — including those who purchased under shared ownership — also benefit from extremely keenly priced interest rates which generally run at around 0.5% lower than the best rates available in the market and currently stand at around 1.5% below average variable rates available in the market. This is a very substantial differential. To take account of the current housing market conditions, the Government's housing policy statement, published in June 2011, 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 Act 2000. Any future changes to legislation governing affordable housing schemes, including shared ownership, will be informed by that review which will shortly commence.

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