Dáil Éireann Debate, Wednesday - 15 May 2019
263. Deputy Sean Fleming asked the Minister for Housing, Planning and Local Government if a house that was originally acquired under the shared ownership scheme with a local authority can now be included in the rent-to-buy scheme; and if he will make a statement on the matter. [21032/19]
Amharc ar fhreagraIn 2011, the Government announced the standing down of all affordable housing schemes, including the shared ownership scheme. Following a review of the shared ownership scheme undertaken in 2013, my Department together with the Housing Agency, the Housing Finance Agency and local authorities, considered the affordability issues facing some borrowers, who purchased properties under the shared ownership schemes and devised a more affordable long-term path towards full home ownership. Indeed, a range of measures have already been undertaken to reduce the monthly payments of shared ownership borrowers.
The index linked shared ownership scheme, which operated from 1999 until 2002, has been revised with regard to the annual indexation of the rental equity balance and rental payments. The amendments, which came into effect on 1 July 2015, reduce the monthly cost for these borrowers and avoid rental equity balances increasing for the remaining term. In addition, the variable mortgage interest rate charged to local authority borrowers was reduced to 2.3% with effect from 1 July 2016, which has helped many shared ownership borrowers.
An innovative shared ownership restructuring option has been available to shared ownership borrowers since 2016, and involves rolling-up all outstanding debt under a share ownership arrangement into a single annuity loan. The term of the annuity loan will be determined by the amount of the monthly repayment deemed to be affordable and sustainable for each shared ownership borrower. This restructuring option allows the borrower to have a regularised, restructured repayment solution, which is more easily understood. This arrangement may be of particular benefit to those shared ownership borrowers who are nearing the end of their annuity term but who have not made sufficient provision for the repayment of their rental equity balance. The feasibility of this new option for each shared ownership borrower will be determined by their local authority, and may not be appropriate in all cases. For example, in some instances, continuing with the current shared ownership arrangement may be the best option for both the shared ownership borrower and the local authority, or in other cases where the outstanding debt may not be sustainable for the borrower in the long-term, the Local Authority Mortgage to Rent (LAMTR) option might ultimately be the appropriate solution.
There is no obligation on any shared ownership borrower to restructure their loan arrangement and local authorities in implementing the restructuring option will direct shared ownership borrowers to seek financial and legal advice prior to accepting any offer of a restructuring option. The new Abhaile Service, accessed via MABS, can assist shared ownership borrowers who are in arrears to access free independent expert financial and legal advice. Full details of the supports offered by the Abhaile Service are available from https://www.mabs.ie/en/abhaile/. Under the restructuring option, where shared ownership borrowers require financial and legal advice outside of that provided via MABS, local authorities will arrange to pay the cost of these fees to a maximum of €1,000, excluding VAT. Detailed guidance, training and direction have been provided by my Department and the Housing Agency to local authorities regarding the implementation of the measure and my Department is continuing to monitor the impact of the new measure for borrowers.
Details on the measures available to borrowers with shared ownership arrangements are available from their local authority. Overall, local authority borrowers are encouraged to engage with their local authority at the earliest opportunity if they are having difficulties making the repayments on their shared ownership arrangement. Information in relation to the local authority mortgage arrears resolution process (MARP) and the help available to borrowers is also available on my Department's website at the following link:
http://www.housing.gov.ie/housing/home-ownership/mortgage-arrears/guidance-mortgage-arrears.
